This is the accessible text file for GAO report number GAO-10-226 
entitled 'Human Capital: Continued Opportunities Exist for FDA and OPM 
to Improve Oversight of Recruitment, Relocation, and Retention 
Incentives' which was released on February 22, 2010. 

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Report to Congressional Committees: 

United States Government Accountability Office: 
GAO: 

January 2010: 

Human Capital: 

Continued Opportunities Exist for FDA and OPM to Improve Oversight of 
Recruitment, Relocation, and Retention Incentives: 

GAO-10-226: 

GAO Highlights: 

Highlights of GAO-10-226, a report to congressional committees. 

Why GAO Did This Study: 

Retention incentives encompass the majority of 3R incentives awarded 
to FDA employees in recent years (see table 1). 

Table 1: Number and Percentage of FDA 3R Incentives Awarded by Year: 

Year: 2007; 
Recruitment incentives, Number: 3; 
Recruitment incentives, Percentage: 0.4%; 
Retention incentives, Number: 749; 
Retention incentives, Percentage: 99%; 
Relocation incentives, Number: 8; 
Relocation incentives, Percentage: 1%. 

Year: 2008; 
Recruitment incentives, Number: 366; 
Recruitment incentives, Percentage: 35%; 
Retention incentives, Number: 673; 
Retention incentives, Percentage: 64%; 
Relocation incentives, Number: 10; 
Relocation incentives, Percentage: 1%. 

Year: 2009; 
Recruitment incentives, Number: 93; 
Recruitment incentives, Percentage: 15%; 
Retention incentives, Number: 516; 
Retention incentives, Percentage: 85%; 
Relocation incentives, Number: 0; 
Relocation incentives, Percentage: 0%. 

Source: GAO analysis of HHS data. 

Note: The 2009 data are of July 4, 2009; FDA had not awarded any 
relocation incentives in 2009. 

[End of table] 

FDAs employees in mission-critical occupations received the greatest 
number of 3R incentives from 2007 to 2009. However, without an updated 
strategic workforce plan or established agencywide indicators for 
tracking its use of 3R incentives, FDA cannot assess the impact that 
these incentives have on its overall human capital strategy. While FDA 
collects data on workforce indicators at the agency and center levels, 
it has not analyzed how 3R incentives are helping the agency achieve 
its recruitment and retention goals. 

On the basis of GAOs review of a stratified sample of FDAs 3R 
incentive files awarded from January 2007 through October 2008, GAO 
found that FDA maintained documentation which provided sufficient 
explanation to justify each award. However, several of the incentive 
files we reviewed lacked adherence to certain other requirements, such 
as prescribed contents of a service agreement, which in most instances 
may have resulted from a lack of documentation. To help ensure the 
proper awarding of 3R incentives, FDA has various internal controls in 
place, such as a centralized review and approval process for incentive 
requests. Over the past 3 years, FDA has made some changes to its 
internal controls, such as updating its guidance including the 
standard forms for 3R incentive requests. If effectively implemented, 
FDAs revisions to its internal controls may help ensure that in the 
future 3R incentives are properly awarded and documentation exists to 
support the incentives. 

While both OPM and HHS provide oversight of 3R incentives through 
various mechanisms, including guidance and periodic evaluations and 
accountability reviews, there are opportunities for improvement. As a 
next step, OPM could provide guidance to all agencies on the 
importance of considering succession planning in the decision process 
for awarding retention incentives. While HHSs 3R incentive policy 
generally addressed the requirements for 3R incentive plans as 
outlined in OPMs regulations, there were several instances where the 
policy omitted or did not clearly address certain important 
requirements, such as the conditions for terminating or reducing an 
incentive. 

What GAO Found: 

The Food and Drug Administration (FDA) within the Department of Health 
and Human Services (HHS) has faced challenges in obtaining the 
workforce needed to support its responsibilities and similar to other 
agencies, has paid selected employees recruitment, relocation, and 
retention (3R) incentives. This report examines (1) the extent to 
which FDA is linking its use of 3R incentives to its strategic human 
capital approaches to address its current and emerging challenges; (2) 
the extent to which FDA's 3R incentives were awarded consistent with 
regulations and the internal controls FDA has in place to ensure 
proper disbursement of 3R incentives; and (3) the steps the Office of 
Personnel Management (OPM) has taken to help ensure that agencies have 
effective oversight of their 3R incentive programs and how HHS is 
providing oversight. GAO analyzed a stratified sample of FDAs 3R 
incentives files, 3R data provided by HHS, HHSs 3R policy and FDAs 
guidance, and interviewed HHS, FDA, and OPM senior officials. 

What GAO Recommends: 

GAO recommends that (1) FDA take several actions to improve its 
oversight of 3R incentives; (2) OPM require agencies to incorporate 
succession planning efforts into the decision process for awarding 
retention incentives; and (3) HHS revise its 3R incentive policy to 
address important OPM requirements. FDA and OPM agreed with the 
recommendations and HHS acknowledged the need to update its 3R 
incentive policy. 

View [hyperlink, http://www.gao.gov/products/GAO-10-226] or key 
components. For more information, contact Robert Goldenkoff at (202) 
512-6806 or goldenkoffr@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

FDA Uses 3R Incentives to Recruit and Retain Mission-Critical Staff, 
but Lacks Agencywide Indicators for Tracking the Progress of 3R 
Incentives in Addressing Its Recruitment and Retention Goals: 

FDA Generally Awarded 3R Incentives Consistent with Law and OPM 
Regulations, but Adherence to Some Requirements Was Lacking and FDA 
Could Improve Its Internal Controls: 

OPM and HHS Provide Oversight of 3R Incentives, but Improvements Can 
Be Made: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Highlights of the Food and Drug Administration 3R 
Incentive File Review Results: 

Appendix III: Comments from the Department of Health and Human 
Services: 

Appendix IV: Comments from the Office of Personnel Management: 

Appendix V: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Number and Percentage of FDA 3R Incentives Awarded by Year: 

Table 2: FDA 3R Incentive Population Size and Number of Random Case 
Selections by Stratum: 

Table 3: Examples of How FDA's 3R Incentive Files Addressed Selected 
Requirements: 

Figures: 

Figure 1: Average Percentage of FDA 3R Incentives Awarded by Top 
Mission-Critical Occupational Series from 2007 through 2009: 

Figure 2: HHS and FDA 3R Incentives Awarded and FDA Percentage of HHS 
Total by Year: 

Figure 3: Factors for Justifying a 3R Incentive: 

Figure 4: FDA's Revised Review and Approval Process for 3R Incentive 
Requests: 

Abbreviations: 

3R: recruitment, relocation, and retention: 

CPDF: Central Personnel Data File: 

ERB: Executive Review Board: 

FDA: Food and Drug Administration: 

GP: GS pay plan that covers physicians and dentists paid market pay: 

GR: GS pay plan that covers physicians and dentists covered by the 
Performance Management and Recognition System termination provisions 
paid market pay: 

GS: General Schedule: 

HHS: Department of Health and Human Services: 

OPDIV: operating division: 

OPM: U.S. Office of Personnel Management: 

RHRC: Rockville Human Resources Center: 

SES: Senior Executive Service: 

SF 50: Standard Form 50: 

[End of section] 

United States Government Accountability Office: Washington, DC 20548: 

January 22, 2010: 

The Honorable Henry A. Waxman: 
Chairman: 
The Honorable John D. Dingell: 
Chairman Emeritus: 
The Honorable Joe L. Barton: 
Ranking Member: 
Committee on Energy and Commerce: 
House of Representatives: 

The Honorable Bart Stupak: 
Chairman: 
The Honorable Greg Walden: 
Ranking Member: 
Subcommittee on Oversight and Investigations: 
Committee on Energy and Commerce: 
House of Representatives: 

The Food and Drug Administration (FDA) within the Department of Health 
and Human Services (HHS), has had difficulties carrying out its 
expanding mission in part because of challenges in obtaining the 
workforce needed to support its increased responsibilities. We have 
designated two areas of federal oversight under FDA--food safety and 
medical products--as high risk in 2007 and 2009, respectively, and 
reported on the significant challenges that continue to compromise the 
agency's ability to protect Americans from unsafe food and ineffective 
drugs and medical products.[Footnote 1] 

FDA has announced plans that may help it address some of its resource 
challenges, such as a major, multiyear hiring initiative and an 
information technology modernization effort. Although these are 
positive steps, FDA still faces workforce challenges. For example, 
about 70 percent of FDA's career employees onboard as of fiscal year 
2008 will be eligible to retire by the end of fiscal year 2014, which 
may lead to gaps in institutional knowledge at all levels.[Footnote 2] 
FDA will face high retirement eligibility rates with career employees 
in certain mission-critical occupations, with about 63 percent of 
mathematical statisticians and 73 percent of pharmacologists onboard 
as of fiscal year 2008 eligible to retire by the end of fiscal year 
2014. 

To help the federal government improve its competitiveness in 
recruiting and maintaining a high-quality workforce, the Federal 
Workforce Flexibility Act of 2004 provided federal agencies increased 
flexibilities to award recruitment, relocation, and retention (3R) 
incentives.[Footnote 3] Governmentwide, federal agencies awarded 3R 
incentives totaling more than $207 million in 2007 with retention 
incentives accounting for the majority of 3R incentive costs at $127 
million.[Footnote 4] In May 2009, the U.S. Office of Personnel 
Management (OPM) asked agencies to review their 3R incentive programs 
to ensure that current and future incentives are used only when 
necessary to support their mission and program needs, and are 
consistent with the criteria in law and regulations. As a next step, 
in July 2009, OPM directed agencies to review and certify that 3R 
incentive plans and internal approval and monitoring procedures were 
consistent with regulations. 

In the last few years, FDA's use of retention incentives has come 
under greater congressional scrutiny. Specific issues concerned the 
number and dollar amount of incentives being given to FDA managers and 
whether they met OPM regulatory requirements. At your request, this 
report examines (1) the extent to which FDA is linking its use of 3R 
incentives to its strategic human capital approaches to address its 
current and emerging challenges; (2) the extent to which FDA's 3R 
incentives were awarded consistent with the law, regulations, and 
guidance and the internal controls FDA has in place to ensure proper 
disbursement of 3R incentives and encourage efficient use; and (3) the 
steps OPM has taken to help ensure that agencies including HHS have 
effective strategic oversight of their 3R incentive programs and how 
HHS is providing oversight of its 3R incentive program. 

To meet our objectives, we used a data collection instrument to 
analyze a stratified sample of FDA's files for 3R incentives awarded 
from January 1, 2007, to October 31, 2008 by year and incentive type. 
[Footnote 5] We randomly selected files for review from the 2007 and 
2008 retention incentives and 2008 recruitment incentives. For the 
2007 and 2008 relocation incentives and 2007 recruitment incentives, 
we reviewed all of the files due to the small population size. For the 
randomly selected files, we weighted each incentive file so that our 
sample statistically represented the population. In addition, we 
analyzed data provided by HHS on FDA's and the department's use of 3R 
incentives for calendar years 2007 to 2009 (as of July 4) along 
various categories including type of incentive, pay plan, occupational 
series, and duty station; analyzed FDA data from OPM's Central 
Personnel Data File (CPDF) for fiscal year 2008 to identify trends in 
FDA's workforce, such as retirement eligibility by occupational series 
for career permanent employees; analyzed HHS's 3R incentive policy to 
determine consistency with OPM's regulatory requirements; and 
interviewed HHS, FDA, and OPM senior officials knowledgeable about 3R 
incentives. We checked the 3R incentive data provided by HHS for 
reasonableness and the presence of any obvious or potential errors in 
accuracy and completeness. We interviewed selected HHS officials 
knowledgeable about the data, and brought to the attention of these 
officials any concerns or discrepancies we found with the data for 
correcting or updating and further clarification. On the basis of 
these procedures, we believe the data provided by HHS are sufficiently 
reliable for use in the analyses presented in this report. (See 
appendix I for a more detailed discussion of our objectives, scope, 
and methodology.) 

We conducted this performance audit from December 2008 through January 
2010 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

Background: 

3R incentives are among the human capital flexibilities intended to 
help federal agencies address human capital challenges and to build 
and maintain a high-performing workforce with essential skills and 
competencies. According to OPM, the intent of 3R incentives is to 
provide agencies with discretionary authority to use nonbase 
compensation to help recruit, relocate, and retain employees in 
difficult staffing situations. On the basis of OPM's regulations for 
3R incentives, employees eligible to receive these incentives include 
the following positions: General Schedule (GS), senior-level, 
scientific or professional, Senior Executive Service (SES), law 
enforcement, Executive Schedule or those whose pay is set at a rate 
equal to a rate for the Executive Schedule, prevailing rate positions 
(employment in a recognized trade or manual labor occupation), and 
employees in a category approved by OPM at the request of the head of 
an agency.[Footnote 6] The regulations also prohibit certain employees 
from receiving 3R incentives including those who are in positions that 
are appointed by the President with or without Senate confirmation, 
noncareer SES members, agency heads or those expected to receive an 
appointment as an agency head, and employees in positions excepted 
from the competitive service by reason of their confidential, policy- 
determining, policy-making, or policy-advocating duties (i.e., 
Schedule C employees).[Footnote 7] 

At FDA, certain physicians and dentists appointed under title 38 of 
the United States Code[Footnote 8] and Senior Biomedical Research 
Service employees appointed under 42 U.S.C.  237 are also eligible 
for 3R incentives.[Footnote 9] FDA employees appointed pursuant to 42 
U.S.C.  209(f) and 209(g) are not eligible to receive 3R incentives 
under the authority contained in title 5 of the United States Code. 
According to an HHS official, FDA's authority to award incentive 
payments to these employees is derived from the appointment provisions 
themselves. Beginning in 2007, FDA began phasing out the use of 
retention incentives for employees paid under titles 38 and 42. (See 
appendix II for additional details on employee eligibility.) 

The Federal Employees Pay Comparability Act of 1990 first authorized 
OPM to allow federal agencies to give 3R incentives to employees under 
the following circumstances.[Footnote 10] 

* A recruitment incentive could be given to a new employee in a 
federal position and a relocation incentive to a current employee who 
had to move to accept a different federal position if it was 
determined that the agency would be likely to encounter difficulty 
filling the position in the absence of such an incentive. 

* A retention incentive could be given to a current employee if the 
unusually high or unique qualifications of the employee or a special 
need of the agency made retaining that employee essential, and it was 
determined that the employee would be likely to leave federal service 
without the incentive. 

The Federal Workforce Flexibility Act of 2004 revised prior 3R 
incentive authorities with the goal of increasing agencies' 
flexibility in using 3R incentives. We and OPM had reported that 3R 
incentives were effective human capital management tools, but agencies 
were failing to use them extensively due to a variety of factors 
including limited funds and reduced hiring due to downsizing.[Footnote 
11] The 2004 act increased the number of situations in which agencies 
may give 3R incentives; allowed for alternative methods of payments, 
such as installments or lump sum; and increased the potential size of 
the incentives. For example, individual retention incentives that were 
capped at 25 percent of the employee's basic pay rate could be 
increased to up to 50 percent in cases of critical agency need with 
OPM's approval. The act also required OPM to annually report to 
Congress to ensure the incentives were being used effectively. In 
December 2007, OPM issued final regulations on 3R incentives 
reflecting its technical modifications and corrections to and 
clarifications of the interim regulations issued in May 2005. 
Separately, in November 2007, OPM issued final regulations 
implementing an additional authority to agencies to pay a retention 
incentive to an employee who would be likely to leave for a different 
federal position before the closure or relocation of the employee's 
office, activity, or organization. 

Through its regulations, OPM requires agencies to develop plans for 
using 3R incentives outlining, among other things, the required 
documentation for the justification and any criteria for determining 
the amount of the incentive and the length of the service period under 
a service agreement, which is a written agreement between the agency 
and the employee outlining the terms of the incentive. According to 
OPM officials, agencies do not need OPM approval of their 3R incentive 
plans in order to use these incentives. HHS has issued a 
departmentwide 3R incentive plan or policy that applies to all of its 
agencies or operating divisions (OPDIV), as HHS refers to them, 
including FDA. According to HHS's Deputy Assistant Secretary for Human 
Resources, the OPDIVs are allowed to develop more stringent internal 
guidance to supplement HHS's policy, but they cannot make their 
internal processes for awarding 3R incentives more lenient. Building 
on HHS's 3R incentive policy for the department, FDA issues 
supplemental guidance and instructions to its employees for awarding 
3R incentives. Applicable to all of its centers and offices, FDA uses 
standard forms for requesting recruitment, relocation, and retention 
incentives with instructions attached for completing the forms that 
outline the regulatory and HHS policy requirements for those types of 
incentives. The official who is recommending the individual for the 
incentive must complete the form prior to seeking approval of the 
award. 

FDA Uses 3R Incentives to Recruit and Retain Mission-Critical Staff, 
but Lacks Agencywide Indicators for Tracking the Progress of 3R 
Incentives in Addressing Its Recruitment and Retention Goals: 

Employees in mission-critical occupations as identified by FDA make up 
the majority of FDA's workforce and have also received the greatest 
number of 3R incentives from 2007 to 2009.[Footnote 12] According to 
the Assistant Commissioner for Management at FDA, mission-critical 
positions are broadly categorized at the agency level and not specific 
to FDA centers. These positions encompass the core scientific base of 
FDA, and include occupations such as medical officers, 
pharmacologists, and consumer safety officers. According to this 
official, mission-critical positions have remained unchanged with the 
exception of a few positions that have become more significant as the 
nature of FDA's work has evolved, such as operations research analysts 
and veterinary medical officers. 

As shown in figure 1, employees in different mission-critical 
occupations received different percentages of each type of incentive. 
Medical officers, which includes physicians and surgeons, consistently 
received on average the greatest number of recruitment incentives of 
any mission-critical occupation from 2007 to 2009. Consumer safety 
officers, which is the largest mission-critical occupation according 
to FDA, on average received the majority of relocation incentives 
among mission-critical occupations, while pharmacologists on average 
ranked first among all mission-critical occupations that received 
retention incentives over this time period.[Footnote 13] 

Figure 1: Average Percentage of FDA 3R Incentives Awarded by Top 
Mission-Critical Occupational Series from 2007 through 2009: 

[Refer to PDF for image: 3 pie-charts] 

Recruitment Incentives: 
Medical Officer (physicians): 30%; 
Chemist: 16%; 
Pharmacologist: 13%; 
General Health Scientist: 8%; 
Mathematical Statistician: 8%; 
Consumer Safety Officer: 8%. 

Relocation Incentives: 
Consumer Safety Officer: 74%; 
Medical Officer: 10%; 
Mathematical Statistician: 10%. 

Retention Incentives: 
Pharmacologist: 34%; 
Mathematical Statistician: 24%; 
Medical Officer: 13%; 
Consumer Safety Officer: 4; 
Toxicologist: 3%. 

Source: GAO analysis of HHS data. 

Note: Averages do not total to 100 percent because only the top 
occupations are included in the graphic. FDA did not award each type 
of 3R incentive to every mission-critical occupational series each 
year. 

[End of figure] 

FDA Lacks an Updated Strategic Workforce Plan to Document Its 
Strategies for Achieving Its Recruitment and Retention Goals: 

FDA is facing potential retirements that could result in a loss of 
leadership and institutional knowledge in its mission-critical 
occupations. For example, an average of 24 percent of FDA top 
leadership is retirement eligible in 2014 according to FDA.[Footnote 
14] Additionally, about 73 percent of career pharmacologists and about 
68 percent of career medical officers onboard as of fiscal year 2008 
will be eligible for retirement by the end of 2014. Therefore, it is 
important to ensure that FDA's 3R incentives are helping the agency 
meet its human capital goals. Our previous work has shown that federal 
agencies should ensure that the use of human capital flexibilities 
including 3R incentives are part of an overall human capital strategy 
clearly linked to the mission and program goals of the organization. 
[Footnote 15] Agencies need to plan for how they will use and fund 
these flexibilities, what results they expect to achieve, and what 
methods they will use to evaluate actual results, such as establishing 
indicators for measuring success. Importantly, 3R incentives are just 
one type of flexibility available to agencies for recruiting and 
retaining a quality workforce. Agencies need to assess and determine 
which human capital flexibilities are the most appropriate and 
effective for managing their workforces. Furthermore, an updated 
strategic workforce plan would help FDA clearly document its 
strategies for addressing gaps in the number, skills, competencies, 
and deployment of its workforce and how human capital flexibilities, 
such as 3R incentives, are being used to help achieve recruitment and 
retention goals. 

FDA has outlined its goals and approaches for recruiting and retaining 
the necessary workforce to meet its mission and program goals in its 
succession plan and strategic workforce plan. In its succession plan 
for 2009-2012, FDA defines succession management as the ongoing 
development of potential successors to ensure a smooth transition and 
minimum loss of efficiency when management vacancies occur. To help 
prepare its current and future leadership, FDA outlines specific 
succession planning initiatives in its plan, such as individual 
development planning and training that aligns with organizational 
goals. According to officials at FDA, succession planning has played a 
significant role in filling mission-critical occupations at its 
centers and the plan should help assist FDA with these efforts. While 
some of what is described in FDA's succession plan is prospective, FDA 
officials told us that they are partnering with a university in 
Florida in an attempt to satisfy the agency's long-term staffing needs 
for a mission-critical occupation. Specifically, they are developing 
an undergraduate curriculum for pharmacokineticists intended to help 
increase FDA's recruitment pool for this occupation.[Footnote 16] 

FDA's fiscal year 2006 workforce plan provides an overview of past and 
projected workforce trends and emphasizes the staffing needs of FDA's 
mission-critical programs. According to the Assistant Commissioner for 
Management at FDA, the plan was intended to be a road map for future 
hiring strategies across the agency. However, FDA has not updated the 
workforce plan since 2006 and targets for its recent hiring surges 
have not been included. According to this official, managing FDA 
leadership transitions has been a higher priority than strategic 
workforce planning. FDA is preparing to begin a workforce planning 
effort in fiscal year 2010 to address key agency-level initiatives and 
provide linkages between the agency's use of 3R incentives and broader 
human capital decisions. Having an agencywide workforce plan that 
clearly documents the recruiting and retention goals and strategies 
FDA is working to achieve can help to ensure that the centers are 
aware of the agency's goals and strategies and strategically managing 
their workforces in a manner that meets the agency's needs. Given 
FDA's period of leadership transitions, developing such a workforce 
plan creates a road map for the agency to use to move from the current 
to the future workforce needed to achieve agency goals. 

While not documented in its current workforce plan, FDA has set 
recruitment targets for the agency to address the need to hire 
additional employees in recent years. Specifically, as part of its 
hiring surges in fiscal years 2008 and 2009, FDA set staffing goals 
that were linked to the agency achieving its mission and goals. For 
example, the agency set targets to fill more than 600 new positions 
and to backfill over 700 others in fiscal year 2008 to implement new 
responsibilities as a result of legislation, which it achieved within 
the first 6 or 7 months, according to FDA's Assistant Commissioner for 
Management.[Footnote 17] That was nearly triple the number of people 
FDA hired from 2005 to 2007. Similarly in fiscal year 2009, the agency 
set a goal to hire 1,600 additional full-time equivalent positions. 
According to FDA officials, the agency has exceeded its 2009 hiring 
goals by 22 percent and these targets were set within the centers 
based on their staffing needs. Further, FDA officials told us one of 
its recruitment strategies to increase its Hispanic workforce was to 
target this population during its interview job fairs, but this 
strategy is not documented in its current workforce plan. 

FDA officials told us that they award 3R incentives where they are 
needed most and the type of incentive awarded depends largely on the 
location. For example, recruitment is a larger issue in some of FDA's 
field locations, including areas in Montana and in the southwest along 
the Mexican border. To address this challenge FDA offers relocation 
incentives to employees in its headquarters and field to move to other 
areas of the country. Recognizing the challenge of recruitment in its 
remote field locations, FDA is looking for additional sources of 
recruiting, including state and local governments in these areas. FDA 
officials have found that retention usually is not a problem in its 
field locations. 

FDA Should Better Track How Its Use of 3R Incentives Is Helping the 
Agency Achieve Its Recruitment and Retention Goals: 

We have reported on the importance of establishing the necessary data 
and indicators to track a program's effectiveness, as well as 
establishing a baseline to measure the changes over time and assess 
the program in the future.[Footnote 18] Agencies need such 
measurements to help them determine if a program is worth the 
investment compared to other available human capital flexibilities 
targeted at recruitment and retention of employees, such as student 
loan repayment. FDA has not established agencywide indicators for 
tracking the progress of 3R incentives in addressing recruitment and 
retention needs. While FDA collects data on workforce indicators at 
the agency and center levels, it has not analyzed how 3R incentives 
are helping the agency achieve its recruitment and retention goals. 

FDA collects data on agencywide workforce indicators, such as 
attrition, retirement, and declination rates, which measure the number 
of jobs offered that are declined by potential employees. In addition, 
FDA's centers and offices are responsible for tracking their own 
workforce data as well as the effect of 3R incentives on their 
organizational goals. Specifically, FDA has asked its centers to 
provide more detailed attrition rates over a 2-year period to help 
support the need for 3R incentives. Officials stated that FDA has no 
agencywide exit interview process; rather, it uses HHS's quarterly 
exit survey results. Although some centers track exit survey results 
to determine why employees are leaving the agency, the center data are 
not necessarily provided to the Office of Management--the human 
capital office within FDA--according to the Assistant Commissioner for 
Management at FDA. Further, FDA officials stated that the agency 
relies on HHS-provided data for tracking the number of responses to 
job announcements, and the basis for employee separations, but FDA 
does not have access to all of the necessary data in a useful format 
to accurately track workforce statistics and the linkage to the use of 
3R incentives. 

Additionally, FDA's Assistant Commissioner for Management said the 
agency does not track the use of 3R incentives to assess the 
effectiveness of these payments or how they contribute to FDA's human 
capital goals. For example, FDA does not track statistics on its 
diversity initiatives or the impact of 3R incentives on diversity 
recruiting because there is a lack of available data. However, FDA 
officials said they need to document the agency's short-and long-term 
goals for its 3R incentive program and identify better agencywide 
indicators to support the need for 3R incentives. Presently FDA's 
guiding principles for awarding 3R incentives developed in the summer 
of 2009 are the only documented guidance to centers on 3R incentives, 
but the guiding principles do not address how 3R incentives should be 
used strategically to help achieve agencywide recruitment and 
retention goals. 

Updating its workforce plan to document its recruitment and retention 
goals and strategies and include indicators to track the progress of 
3R incentives in achieving these goals will help ensure FDA makes 
maximum use of funds to recruit and retain key talent, a critical goal 
in an era of fiscal constraints. As we have found in our work on human 
capital flexibilities,[Footnote 19] gauging the 3R incentive program's 
direct effect on recruitment and retention trends may be difficult 
because a 3R incentive is not likely to be the only major factor in an 
employee's decision to join or stay with an agency, although the 
incentive may help to tip the scale in the agency's favor. FDA 
officials told us that they have recently found that other factors, 
such as labor market conditions, could affect these decisions. 

Retention Incentives Account for the Majority of 3R Incentives Awarded 
by FDA and the Percentage of 3R Incentives Awarded by FDA Is Large 
Compared to HHS: 

In 2008 and 2009, recruitment and retention incentives accounted for 
greater than 95 percent of all 3R incentives awarded in FDA, as shown 
in table 1. The majority of the FDA employees receiving 3R incentives 
in 2007 and 2008 were in positions within the GS pay plan, which 
includes consumer safety officers, medical officers, and mathematical 
statisticians, and paid at grades 14 or higher in the case of 
retention incentives. To explain the large decrease in the number of 
retention incentives between 2007 and 2008, FDA officials told us that 
they have taken a more strategic approach to awarding retention 
incentives over the last few years by elevating the approving 
authority of retention incentive renewals to the Commissioner and 
phasing out the use of retention incentives for certain employees paid 
under titles 38 and 42 of the United States Code given existing 
compensation flexibilities with those positions. For example, in 2007, 
FDA employees appointed under title 42, which includes service or 
staff fellows and senior science managers, received 15 percent of all 
retention incentives FDA awarded and 5 percent of retention incentives 
awarded as of July 4, 2009. As a result of its detailed review of its 
3R incentives in 2009, FDA officials said several retention incentives 
were eliminated. In addition, FDA does not allow any new recruitment 
incentive requests for any new employees except for rare and unusual 
circumstances that require the Commissioner's approval. According to 
FDA, the agency continued to honor any recruitment incentives that 
were promised during recruitment discussions with potential employees. 

Table 1: Number and Percentage of FDA 3R Incentives Awarded by Year: 

Year: 2007; 
Recruitment incentives, Number: 3; 
Recruitment incentives, Percentage: 0.4%; 
Retention incentives, Number: 749; 
Retention incentives, Percentage: 99%; 
Relocation incentives, Number: 8; 
Relocation incentives, Percentage: 1%. 

Year: 2008; 
Recruitment incentives, Number: 366; 
Recruitment incentives, Percentage: 35%; 
Retention incentives, Number: 673; 
Retention incentives, Percentage: 64%; 
Relocation incentives, Number: 10; 
Relocation incentives, Percentage: 1%. 

Year: 2009; 
Recruitment incentives, Number: 93; 
Recruitment incentives, Percentage: 15%; 
Retention incentives, Number: 516; 
Retention incentives, Percentage: 85%; 
Relocation incentives, Number: 0; 
Relocation incentives, Percentage: 0%. 

Source: GAO analysis of HHS data. 

Note: The 2009 data are of July 4, 2009; FDA had not awarded any 
relocation incentives in 2009. 

[End of table] 

In comparing FDA's use of 3R incentives to HHS's use of the incentives 
departmentwide, FDA's percentage of HHS's recruitment incentives 
awarded exceeded 25 percent from 2008 to 2009. Specifically, in 2008, 
FDA accounted for 50 percent of all recruitment incentives in HHS, 
which was due to FDA's hiring surge that year. In contrast, FDA's 
total number of retention incentives awarded steadily decreased from 
2007 to 2009 due to the elimination of these incentives for certain 
employees. (See figure 2.) As a point of comparison, in 2008, FDA 
spent over $11 million, which was over half of the total dollars spent 
by HHS on 3R incentive payments; however, FDA employees made up only 
about 16 percent of HHS's total workforce in fiscal year 2008. 

Figure 2: HHS and FDA 3R Incentives Awarded and FDA Percentage of HHS 
Total by Year: 

[Refer to PDF for image: 3 vertical bar graphs] 

Recruitment Incentives: 

Year: 2007; 
FDA: 3; 
HHS (excluding FDA): 273; 
FDA percentage of HHS total: 1%. 

Year: 2008; 
FDA: 366; 
HHS (excluding FDA): 364; 
FDA percentage of HHS total: 50%. 

Year: 2009; 
FDA: 93; 
HHS (excluding FDA): 223; 
FDA percentage of HHS total: 20%. 

Retention Incentives: 

Year: 2007; 
FDA: 749; 
HHS (excluding FDA): 1,171; 
FDA percentage of HHS total: 39%. 

Year: 2008; 
FDA: 673; 
HHS (excluding FDA): 1,276; 
FDA percentage of HHS total: 35%. 

Year: 2009; 
FDA: 516; 
HHS (excluding FDA): 1,159; 
FDA percentage of HHS total: 31%. 

Relocation Incentives: 

Year: 2007; 
FDA: 8; 
HHS (excluding FDA): 47; 
FDA percentage of HHS total: 15%. 

Year: 2008; 
FDA: 10; 
HHS (excluding FDA): 49; 
FDA percentage of HHS total: 17%. 

Year: 2009; 
FDA: 0; 
HHS (excluding FDA): 0; 
FDA percentage of HHS total: 0. 

Source: GAO analysis of HHS data. 

Note: 3R incentives awarded to employees in FDA and HHS from January 
1, 2007, through July 4, 2009. FDA awarded three recruitment 
incentives in 2007. HHS total includes FDA. 

[End of figure] 

FDA Generally Awarded 3R Incentives Consistent with Law and OPM 
Regulations, but Adherence to Some Requirements Was Lacking and FDA 
Could Improve Its Internal Controls: 

OPM regulations outline requirements for the proper awarding of 3R 
incentives and require agencies to keep documentation and records 
sufficient to allow a reviewer to reconstruct the 3R incentive process 
and decision. We reviewed the files of a random, stratified sample of 
3R incentives awarded at FDA from January 2007 through October 2008 to 
determine whether they met requirements in law, OPM regulations, HHS 
policy, and FDA guidance.[Footnote 20] All the FDA files we reviewed 
provided sufficient explanation to justify the awards, addressing one 
or more of the factors for each type of incentive which OPM 
regulations state must be considered, as applicable to the case at 
hand, to support the awarding of the incentive.[Footnote 21] These 
factors are to guide the agency in determining whether a particular 
position would be difficult to fill in the absence of a recruitment or 
relocation incentive, or whether the unusually high or unique 
qualifications of the employee or a special need of the agency for the 
employee's services makes it essential to retain the employee and the 
employee would be likely to leave the federal service in the absence 
of a retention incentive. According to OPM, since the regulations 
require an agency to document only those factors that are applicable 
to the case at hand, one factor could be sufficient support for 
authorizing the incentive. We estimate that every 3R incentive awarded 
during the time of our file review included at least one factor of 
support in the justification for the incentive.[Footnote 22] Figure 3 
lists the factors that an agency must consider in justifying a 3R 
incentive. 

Figure 3: Factors for Justifying a 3R Incentive: 

[Refer to PDF for image: illustration] 

Incentive type: Recruitment; Retention; Relocation; 
Factors: 
* The salaries typically paid outside the federal government for 
similar positions; 
* Special or unique competencies required for the position; 
* Agency efforts to use nonpay authorities, such as special training 
and work scheduling flexibilities, to resolve difficulties alone or in 
combination with a recruitment, relocation, or retention incentive; 
* The desirability of the duties, work, or organizational environment, 
or geographic location of the position; 
* Other supporting factors. 

Incentive type: Relocation; Recruitment; 
Factors: 
* Recent turnover in similar positions; 
* Employment trends and labor-market factors that may affect the 
agency's ability to recruit candidates for similar positions; 
* The availability and quality of candidates possessing the 
competencies required for the position, including the success of 
recent efforts to recruit candidates for the position or similar 
positions using indicators such as offer acceptance rates, proportion 
of positions filled, and the length of time required to fill similar 
positions. 

Incentive type: Retention; 
Factors: 
* Employment trends and labor market factors such as the availability 
and quality of candidates in the labor market possessing the 
competencies required for the position and who, with minimal training, 
cost, or disruption of service to the public, could perform the full 
range of duties and responsibilities of the employee's position at the 
level performed by the employee; 
* The extent to which the employee's departure would affect the 
agency's ability to carry out an activity, perform a function, or 
complete a project that the agency deems essential to its mission; 
* The success of recent efforts to recruit candidates and retain 
employees with competencies similar to those possessed by the employee 
for positions similar to the position held by the employee. 

Source: GAO analysis of OPM regulations. 

Note: This figure does not reflect the factors for justifying 
retention incentives for employees likely to leave for a different 
position in the federal service. 5 C.F.R.  575.315 (d) (2). FDA did 
not award any of these incentives during the time of our review. 

[End of figure] 

The 3R incentive files met additional statutory and regulatory 
requirements, such as awarding 3R incentives only to eligible 
employees and paying of 3R incentives within applicable aggregate pay 
limits prescribed under 5 U.S.C.  5307 or, for certain 
administratively determined pay plans, within the aggregate pay limits 
established by HHS.[Footnote 23] (See appendix II for additional 
information on the aggregate pay limits and other results from the 
file review.) 

However, several of the incentive files we reviewed lacked adherence 
to certain other requirements, such as approval prior to the incentive 
payment, proof of employee relocation, and prescribed contents of a 
service agreement, which in most instances may have resulted from a 
lack of documentation. Overall, the deficiencies we found with the 
lack of adherence to requirements would not invalidate an incentive. 
Internal controls are important for managing an agency's human capital 
system, including the 3R incentive program, to help ensure the 
effective and efficient use of these incentives in accordance with the 
law and OPM regulations.[Footnote 24] Over the past 3 years, FDA has 
made some changes to its internal controls, such as continuing to 
revise its centralized review and approval process for 3R incentive 
requests and updating its guidance including the standard forms for 3R 
incentive requests. If effectively implemented, the revisions to its 
internal controls may help ensure that in the future 3R incentives are 
properly awarded and documentation exists to support the incentives. 

3R Incentives Were Not Always Processed Consistent with Regulations 
and FDA Guidance, but Revisions to FDA's Centralized Review and 
Approval Process May Lead to Improvements: 

OPM regulations require that all incentives must be approved by the 
agency prior to payment to the employee. We estimate that 92 percent 
of all 3R incentives awarded from 2007 through October 2008 were 
approved by the agency, as evidenced by the approving official's 
signature--the FDA Commissioner or designee--prior to payment to the 
employee.[Footnote 25] In addition, the regulations require an agency 
to make the determination to pay a recruitment or relocation incentive 
before the employee enters on duty in the position for which he or she 
was recruited or relocated. We estimate that for all recruitment 
incentives the agency made the determination to pay the incentive, as 
evidenced by the date of the approving official's signature, before 
the prospective employee entered on duty.[Footnote 26] In 4 of 12 of 
the relocation incentive files (the universe during the time of our 
file review), the agency did not make the determination to pay the 
relocation incentive, as evidenced by the date of the approving 
official's signature, before the prospective employee entered on duty. 
However, we verified that no payment was made to the recipients of 
these relocation incentives until after the employee relocated to the 
new position. According to a senior FDA official, the center in FDA 
that requested these relocation incentives did not understand that the 
incentives needed to be provided to the Office of Management--the 
human capital office within FDA--for processing and approval prior to 
the employee entering on duty and mistakenly believed that the former 
Commissioner's memorandum authorizing a broad approval of incentives 
for their center covered these relocation incentive requests. The 
official said that this was an isolated misunderstanding that has been 
corrected with further discussions with the center. 

In addition, according to HHS policy and FDA guidance, the official 
who is recommending the employee for the 3R incentive must sign off on 
the request before the official who approves the award, which in FDA's 
case is the Commissioner or designee.[Footnote 27] We estimate that in 
less than 2 percent of 3R incentives awarded from 2007 through October 
2008 the recommending official did not sign off on the request before 
the approving official.[Footnote 28] In the three relocation incentive 
files that we reviewed where this occurred, the agency used a 
justification and approval for the awards signed by the approving 
official more than 22 months before the awards were recommended. When 
asked why this occurred, FDA said the incentives were mistakenly 
signed out of order. 

Beginning in March 2006, FDA revised its 3R incentive review and 
approval process by centralizing the process--a key internal control 
that if implemented properly may improve the processing sequence of 
the incentives. Since that time, FDA has continued to streamline its 
process, assign oversight responsibility to its Executive Review Board 
(ERB), and issue updated guidance, which it calls guiding principles. 
FDA's ERB, which consists of the Principal Deputy Commissioner who 
serves as the chair, the center directors, the Associate Commissioner 
for Policy, and the Assistant Commissioner for Management, is 
responsible for reviewing all compensation programs and flexibilities 
including 3R incentives across the agency and developing guidelines 
for implementing each program. Since the time of our file review, FDA 
undertook a detailed review of its 3R incentive program and as a 
result of its review, clarified details of FDA's process for approving 
3R incentives and the role of the ERB. Figure 4 shows the revised 
review and approval process for 3R incentive requests that FDA 
currently follows. 

Figure 4: FDA's Revised Review and Approval Process for 3R Incentive 
Requests: 

[Refer to PDF for image: illustration] 

1) At the request of the employees supervisor, administrative staff 
within the applicable FDA center completes a 3R incentive request form 
in consultation with the Office of Management, and the centers 
executive officer reviews the request to ensure it is complete and the 
center has the necessary funds to award the incentive, if approved. 

2) The recommending official signs the 3R incentive request officially 
recommending the employee for the incentive. 

3) The Office of Management reviews and certifies that the 3R 
incentive request is consistent with FDAs guiding principles and OPM 
regulatory requirements. 

4) The Executive Review Board reviews all 3R incentive requests and 
recommends to the FDA Commissioner whether the overall incentive and 
the amount should be approved. The Commissioner or designee approves 
or disapproves the request. 

5) The Office of Management notifies the recommending officials and 
executive officers in the applicable center of the Commissioners 
decision and sends the incentive file to the Rockville Human Resources 
Center for processing and payment of the incentive and checking to 
ensure the files documentation is complete. 

Source: GAO analysis of FDA. 

[End of figure] 

Beginning in September 2009, FDA's procedures call for its Office of 
Management to certify if a new 3R incentive request addresses FDA's 
guiding principles prior to submitting the incentive request to the 
ERB for its review. Further, in an effort to streamline the process, 
the ERB Chair may review and recommend some of the incentive requests 
to the Commissioner without the full ERB review when the Office of 
Management certifies the request. The ERB Chair can request a review 
by the full ERB for any incentive request, according to a senior FDA 
official. Finally, according to a senior official from the Rockville 
Human Resources Center (RHRC), which is responsible for processing 
FDA's personnel actions such as incentive requests, the center adopted 
the practice of double checking the incentive file to ensure the 
documentation in the file, such as the commencement and termination 
dates on the service agreements, are complete after the incentive has 
been processed. 

Relocation Incentive Files Did Not Consistently Document Employees' 
Relocation, but Revisions to the Incentive Form Address These 
Requirements: 

OPM regulations for relocation incentives require that in order to 
receive a relocation incentive the employee's work site for the new 
position must be 50 miles or more from the work site of the position 
held immediately before the move, unless the agency waives the 50-mile 
requirement, and the employee must establish a new residence to accept 
the position. We found that in 3 of 12 of the relocation incentives 
awarded from 2007 through October 2008, the incentive files did not 
document that the employee's new work site was more than 50 miles from 
the previous work site. For example, an individual who received a 
relocation incentive was transferring from another federal agency to 
work at FDA in the Washington, D.C., area and the file did not 
document where that previous agency was located (e.g., Washington, 
D.C., or another city). In addition, 8 of 12 of the relocation 
incentives were paid to the employee before or on the same day that 
the agency had record of the employee establishing a residence in the 
new geographic area.[Footnote 29] In three of these cases, the 
sequence of dates was less than a month different, but in three other 
cases it was several months. For the remaining two cases, the first 
record of the employee's residence in HHS's human capital data system 
was the date of the incentive payment. By reviewing the data system 
and additional employee records, we found proof that for 11 of the 12 
relocation incentives, the employee eventually established a residence 
in the new geographic area. For one incentive the previous address on 
file was an Army P.O. box with no city or state included. According to 
FDA, this individual was deployed with the military to Europe prior to 
establishing a residence in the geographic area for the new position. 
While the relocation incentive forms we reviewed did not include these 
relocation requirements, in the fall of 2008, FDA recognized the need 
to more clearly document these relocation requirements and revised its 
recruitment or relocation incentive form to include check boxes 
addressing these requirements. 

In response to our finding on the dates of relocation, senior 
officials from FDA and RHRC acknowledged that there is no formal 
process to document that the new work site is greater than 50 miles 
from the previous work site or that the individual has established a 
residence in the new geographic area before the incentive is awarded. 
Rather, the RHRC official said they check these requirements through 
more informal means--conversations with the employee, reviewing the 
resume, and knowledge of where the person is coming from, which in 
some cases, is such a great distance from the new duty station that it 
is common knowledge that the new work site is greater than 50 miles 
from the previous work site and the individual has established a 
residence in the new geographic area. According to FDA, the centers 
are to verify the change of residence before submitting the incentive 
request for payment processing to RHRC by checking that a personnel 
action for an address change to the new duty station has been 
submitted. As a next step, the centers are to check in the data system 
that the address has been changed. In addition, FDA and RHRC officials 
said there may be a delay in RHRC's processing of the change of 
address from the time the employee submits the request, which may 
account for the sequence of dates. 

As another explanation for the difference in dates, a senior FDA 
official explained that employees who have received the incentive are 
permitted to stay in temporary housing after receiving the incentive 
before they officially establish a new residence and change their 
residence with the agency. OPM officials stated that the regulations 
do not define "residence" for this purpose and since relocation 
incentives may be paid for temporary work site changes, it is not 
necessary for an employee to move his or her permanent residence to 
qualify for a relocation incentive; establishing temporary housing is 
acceptable. FDA and RHRC officials noted that in some of the older 
files we reviewed there was no place to document that an employee had 
established a new residence or relocated a distance greater than 50 
miles, as the current incentive form now allows. 

Service Agreements Failed to Include Elements Required in Statute and 
OPM Regulations, but Revised Guidance May Lead to Some Improvement: 

The service agreements frequently failed to include contents 
prescribed by statute and OPM regulations. Consistent with the statute 
and regulations, FDA requires service agreements for recruitment and 
relocation incentives, but does not use service agreements for 
retention incentives.[Footnote 30] In some areas, we observed 
appropriate documentation of the prescribed contents in the service 
agreement, such as the total amount of the incentive and length of the 
service period, but other areas were lacking, such as the method of 
paying the incentive and timing and amounts of each incentive payment. 
Not including the prescribed contents of the service agreement may 
affect FDA's ability to recover funds should the agency terminate or 
reduce an incentive. For an employee who leaves the position prior to 
completing the service period for the incentive, FDA uses information 
in the service agreement to determine the prorated amount of the 
incentive payment that needs to be collected from the former employee. 
Since the time of our file review, FDA has updated its guidance and 
recruitment or relocation incentive form including the service 
agreement section, which if effectively implemented may help prevent 
future problems associated with deficient service agreements. 

We estimate that all of the recruitment incentive files[Footnote 31] 
and 11 of 12 of the relocation incentive files awarded from 2007 
through October 2008 documented a permitted total incentive amount in 
the service agreement--the maximum amount is 25 percent of base pay--
with the exception of the 1 relocation incentive file that lacked a 
service agreement, but documented an appropriate total incentive 
amount elsewhere in the file. While considering the criteria in HHS's 
3R incentive policy, FDA has established guidelines for determining 
the amounts of the 3R incentives. Specifically, during the time of our 
file review, recruitment and relocation incentives were to be between 
10 and 15 percent of base pay. 

The service period, which is a specified period of employment with the 
agency the employee agrees to complete in exchange for payment of the 
incentive, may not exceed 4 years for recruitment and relocation 
incentives with a minimum of 6 months for recruitment incentives. With 
the exception of one relocation incentive file which lacked a service 
agreement, all the recruitment and relocation incentive files 
documented a permitted length of service in the service agreement 
length field.[Footnote 32] FDA sets guidelines for determining the 
length of the service period for recruitment and relocation 
incentives. According to a senior FDA official, FDA has traditionally 
used 12 months as the length, but in early 2008, as FDA began hiring a 
large number of employees, it started requiring a length of 18 months. 
If FDA authorized multiple incentives to an employee, e.g., student 
loan repayment in addition to a recruitment incentive, it required a 
24-month service period and in some cases where FDA approved a higher 
percentage for the incentive amount, it required a 36-month service 
period. 

Further, the service agreement for recruitment and relocation 
incentives must specify the method of paying the incentive, and the 
timing and amounts of each incentive payment (i.e., a lump sum at the 
beginning or end of the service period, installments throughout the 
service period, or a combination). We estimate that 12 percent of the 
recruitment incentives,[Footnote 33] and 1 of 12 of the relocation 
incentives awarded from 2007 to October 2008, included how the 
incentive was to be paid--a lump sum payment--and the amount. None of 
the recruitment and relocation incentives included when the incentive 
would be paid--at the beginning of the service period--in the service 
agreements.[Footnote 34] According to a senior FDA official, FDA has 
traditionally paid recruitment and relocation incentives as lump sum 
payments at the beginning of the service period because it is most 
attractive to prospective employees at recruitment fairs or interviews 
and it places less burden on FDA to maintain records and monitor 
payments than biweekly or quarterly payments. According to this 
official, FDA has previously explored providing managers with other 
payment options and managers overwhelmingly responded that this 
payment method was most effective. The service agreement section of 
FDA's current recruitment or relocation incentive form now states that 
the payment is to be made as a lump sum, but does not specify the 
timing of the payment. 

FDA's service agreements for recruitment and relocation incentives 
also included fields for the commencement and termination dates of the 
service period as required. We estimate that about 25 percent of 
recruitment incentive files, and 1 of 12 of the relocation incentive 
files during the time of our file review, included both commencement 
and termination dates.[Footnote 35] A senior FDA official explained 
that once the Commissioner approves the award, the Office of 
Management sends the incentive file to RHRC, which is responsible for 
processing the incentives. During the processing of the award, the 
dates of the service period are finalized and according to this FDA 
official, RHRC officials must fill in the dates once they determine 
the official effective date of the incentive. A senior RHRC official 
noted that there previously has been no system to add these dates, so 
this step was often missed. As discussed earlier, according to this 
official, in the fall of 2009, RHRC adopted the practice of double 
checking the incentives to ensure the documentation in the file, such 
as the commencement and termination dates on the service agreements, 
are complete after the incentive has been processed. 

OPM officials responsible for administering the governmentwide 3R 
incentive program commented that while not necessarily invalidating 
the incentive, these missing elements in the service agreements are 
potentially significant omissions and a lack of documentation may lead 
to problems in paying the incentives. For example, the timing and 
amount of each incentive payment needs to be documented in the service 
agreement for disbursement purposes and to ensure that the employee 
and agency concur about the payment schedule. Without this 
information, the agency may have a difficult time supporting its case 
if the employee questions payments, and the payment schedule is not 
documented in the file. OPM officials said that the agency has a 
general responsibility to ensure all requirements of the incentive are 
clearly laid out in the incentive file and communicated to the 
employee. The officials added that it was important that the 
commencement and termination dates of the service period be documented 
because FDA may be hindered in exercising proper oversight. Without 
the dates, it could be difficult for the agency to recover incorrect 
payments or establish that an employee has left the position prior to 
completing the service period outlined in the service agreement. 

FDA Could Further Improve Its Guidance for 3R Incentives: 

While FDA revised its guidance since the time of our file review, FDA 
has not addressed several areas specified in the regulations in its 
guidance for retention incentives. First, FDA's guidance states that 
all recruitment and relocation incentives are to be paid as lump sum 
payments, but FDA does not include the method it uses to pay retention 
incentives--biweekly installment payments--in its guidance. A senior 
FDA official said it has been a long-standing practice in HHS to give 
retention incentive payments in biweekly installments and acknowledged 
that the guidance should be updated to reflect this practice. By 
including the payment method in its guidance, FDA will help ensure 
that the method is communicated to all employees and that payments are 
made in accordance with regulations. 

Second, as specified in the regulations, FDA's guidance does not 
include a condition for terminating a retention incentive when no 
service agreement is required based solely on the management needs of 
the agency. Not including all of the termination conditions in its 
guidance could hinder employees' understanding of the conditions under 
which they would no longer receive incentive payments, such as due to 
insufficient agency funds. While FDA's guidance generally addresses 
the conditions for terminating retention incentives due to the fault 
of the employee, such as receiving a performance rating of less than 
"fully successful," the other conditions for termination are impressed 
upon managers through meetings and other communication on the 
importance of using these incentives as discretionary flexibilities, 
according to a senior FDA official. As OPM has stated, the agency has 
a general responsibility to ensure all requirements of the incentive 
are clearly communicated to the employee. 

OPM and HHS Provide Oversight of 3R Incentives, but Improvements Can 
Be Made: 

OPM Provides Oversight of 3R Incentives through Various Mechanisms, 
but a Stronger Emphasis on Agencies' Strategic Use of 3R Incentives Is 
Needed: 

The 3R incentive authorities provided under the Federal Workforce 
Flexibility Act of 2004 were designed to provide agencies with 
additional flexibility to help recruit and retain employees and better 
meet agency strategic human capital needs. Since agencies began using 
the new flexibilities, OPM has provided governmentwide oversight by 
reviewing and reporting on agencies' use of 3R incentives, providing 
guidance to agencies, and evaluating agencies' human capital systems 
including the use of 3R incentives. 

OPM Annually Reviews and Reports on Agencies' Use of 3R Incentives: 

Because the Federal Workforce Flexibility Act of 2004 requires OPM to 
annually report to Congress on how agencies used 3R incentives, OPM 
requires agencies to report that information annually to OPM. Agencies 
must submit data on the number and dollar amount paid by incentive 
type, pay grade or work level, occupational series, and other 
variables and descriptive information on how the 3R incentive 
authority was used that year. For the 2007 annual report to Congress, 
OPM also asked agencies to provide information on how the use of 3R 
incentives helped improve their agencies' recruitment and retention 
efforts and identify any barriers the agencies faced in using 3R 
incentives. However, the descriptive information in OPM's annual 
report to Congress that agencies provided on how 3R incentives helped 
address their recruitment and retention efforts is anecdotal, and 
according to OPM's Deputy Associate Director in the Center for Pay & 
Leave Administration, OPM's annual report is not intended to be an 
evaluation determining whether agencies are following the regulations 
and using the 3R incentive authorities appropriately. The act's 
reporting requirement will sunset after OPM's report covering 2009, 
but according to OPM, OPM may ask agencies to continue their 3R 
incentive reporting.[Footnote 36] Therefore, it will be important for 
OPM to determine what it will do with that information going forward. 

In July 2009, the OPM Director initiated a governmentwide review of 3R 
incentives to help ensure effective use of 3R incentives and identify 
opportunities to strengthen the 3R incentive program administration 
and oversight. When asked about the impetus for this review, the 
Deputy Associate Director said the economic situation the nation is 
facing and the renewed interest in federal service caused the OPM 
Director and administration to question if the need for 3R incentives 
and the amount of money agencies spend on these incentives--in 
particular retention incentives--was still necessary. 

* OPM directed agencies to review their use of 3R incentives and if 
needed, update their 3R incentive plans, approval, and monitoring 
procedures to ensure they meet regulatory requirements. OPM requested 
agencies certify that they completed the review by signing a form and 
submitting it to OPM by the end of August 2009. A senior HHS official 
in the human resources office said HHS completed its review and 
certified to OPM that HHS has a plan for awarding 3R incentives that 
meets regulations. According to OPM's Deputy Associate Director, the 
agency review was a one-time request by OPM to help ensure that 
agencies' 3R incentive plans comply with the most recent version of 
the regulations. 

* OPM is analyzing trends in the use of 3R incentives governmentwide 
and in the 12 agencies (including HHS) that spent the most in terms of 
overall dollars on 3R incentives according to 2007 data the agencies 
submitted for OPM's annual report to Congress. For these 12 agencies, 
OPM is also analyzing trends in their workforce data, such as the 
number of recruitment incentives as a percentage of new hires. 
According to an OPM official, OPM expects to complete its review in 
early 2010 and will share the results with agencies shortly after. 
Further, OPM formed a workgroup of the compensation experts from these 
12 agencies to develop recommendations for measuring the cost-benefit 
of the 3R incentive program for the federal government and evaluating 
what the impact would be on recruitment and retention efforts if 
agencies were to scale back their funding of the 3R incentives. 
According to this OPM official, as of October 2009, the workgroup has 
drafted recommendations and is discussing how to share its 
recommendations with the Chief Human Capital Officers Council. 

According to OPM, OPM's and the agencies' reviews of 3R incentives 
could result in OPM guidance on metrics agencies may use to ensure the 
incentives are being used effectively and addressing their recruitment 
and retention goals. Such metrics would enable agencies to report more 
systematically on the results of their use of 3R incentives. 
Continuing to have governmentwide information on 3R incentives will 
provide OPM and policymakers with the information they need to help 
assess trends in the overall usage of the 3R incentive program across 
the government and determine if changes are needed. 

OPM's 3R Incentive Guidance to Agencies Could More Fully Emphasize the 
Importance of Considering Succession Planning in the Decision Process 
for Awarding Retention Incentives: 

Since issuing interim regulations for 3R incentives in 2005, OPM has 
issued final regulations for 3R incentives and retention incentives 
for employees who are likely to leave for a different federal position 
before the closure or relocation of the employee's office, issued 
memorandums and posted frequently asked questions and fact sheets 
providing guidance on the use of 3R incentives on its Web site, and 
held forums for agency officials to discuss the regulatory changes and 
other topics in May 2005 and March 2008. According to OPM, OPM also 
provides guidance in response to agency inquiries through e-mails or 
phone calls on agency-specific 3R issues. In the 2009 memorandums 
providing guidance to agencies for reviewing their 3R incentive 
programs, the OPM Director stressed the importance of ensuring the 
money spent on 3R incentives is being used effectively and that the 
cost of using any pay flexibilities, including 3R incentives, should 
be weighed against the benefits gained especially in the case of 
retention incentives, which account for the majority of 3R incentive 
costs. 

As a next step, OPM could provide guidance to all agencies on the 
importance of considering succession planning in the decision process 
for awarding retention incentives. We have noted the importance of 
succession planning to strengthen both current and future 
organizational capacity and identify, develop, and select successors 
who are the right people, with the right skills, at the right time for 
leadership and other key positions.[Footnote 37] OPM supports 
succession planning as a vital tool for maintaining a highly-skilled 
workforce and, according to OPM, succession planning may help an 
agency reduce its need more quickly for an employee's services to a 
level that makes it unnecessary to continue paying the retention 
incentive and allows the agency to terminate it. However, through its 
regulations and guidance, OPM does not require agencies to consider 
succession planning as part of the decision and documentation process 
for awarding a retention incentive. The regulations allow agencies to 
award retention incentives to employees, including those who are 
eligible to retire and are likely to leave federal service in the 
absence of receiving an incentive. While requiring agencies to 
annually review the conditions for giving the retention incentive to 
ensure they are still present when a service agreement is not 
required, OPM regulations do not place any restriction on the number 
of consecutive years an individual can receive a retention incentive. 

OPM Evaluates Agencies' Human Capital Management Systems Including the 
Use of 3R Incentives: 

OPM provides oversight of agencies' human capital systems including 
the use of 3R incentives by periodically conducting two types of 
evaluations--human capital management evaluations and delegated 
examining reviews[Footnote 38]--and participating in agency-led 
evaluations as part of their broader human capital accountability 
requirements under OPM's Human Capital Assessment and Accountability 
Framework by providing guidance and assistance. As part of these 
evaluations, OPM reviews an agency's 3R incentive plan including 
designation of the proper approval authority, documentation of 
individual incentive decisions, and agency 3R incentive data for 
compliance with applicable regulations. An OPM official responsible 
for conducting the evaluations said examples of 3R incentive problems 
that OPM may find would be an incomplete or missing incentive request 
form or justifications lacking the necessary documentation for the 
incentive. If OPM finds that an agency's 3R incentive plan or payments 
do not comply with regulations, OPM includes a required action in its 
evaluation report, which gives the agency 60 days to submit to OPM for 
approval the evidence that it has corrected any identified violations. 
According to this official, OPM may make recommendations to the agency 
for improvements, but it does not follow up on the implementation of 
these recommendations since they do not pertain to legal or regulatory 
violations. Regarding an opportunity for improvement that OPM sees for 
agencies' use of 3R incentives based on these evaluations, the 
official stated that OPM would like to see a more strategic approach 
to overall 3R incentive program design and implementation to help 
ensure the incentives are used appropriately to reflect changing 
conditions in the agency and the labor market. OPM expects each agency 
to perform the necessary analysis to determine the tools and 
flexibilities, including 3R incentives, which would help each agency 
achieve its goals as part of each agency's strategic workforce 
planning process, according to this official. It is important for OPM 
to encourage agencies to take this step and identify the linkage 
between an agency's use of 3R incentives and meeting its recruitment 
and retention goals. 

Most recently, OPM conducted several delegated examining reviews for 
organizations within HHS including RHRC, which provides human capital 
services to FDA, in fiscal year 2006. OPM has not recently conducted 
any human capital management evaluations at HHS; rather, OPM 
participates in the HHS-led accountability reviews, such as the 
reviews of several OPDIVs including FDA in fiscal year 2007. OPM did 
not examine HHS's 3R incentive program as part of its delegated 
examining reviews and found no problems with the use of 3R incentives 
in its participation in the HHS-led reviews of several OPDIVs in 
fiscal year 2007. 

HHS Provides Oversight of 3R Incentives, but Areas of Its 3R Incentive 
Policy Could Be Strengthened: 

HHS provides oversight of its OPDIVs'--the agencies within HHS--use of 
3R incentives by implementing a departmentwide 3R incentive policy and 
monitoring and periodically conducting accountability reviews of its 
OPDIVs' human capital systems including the use of 3R incentives. 

HHS Implements a Departmentwide Policy for 3R Incentives, but the 
Policy Does Not Clearly Address Certain Important Requirements: 

Figure 28: According to OPM regulations, the agency's 3R incentive 
plan must cover certain requirements, such as the designation of 
officials with authority to review and approve the payments, required 
documentation for justifying the incentive, and conditions for 
terminating an incentive and obligations of the agency and employee 
upon such termination, among other things. HHS developed a written 
policy for authorizing the use of 3R incentives across the department. 
[Footnote 39] While HHS's 3R incentive policy generally addressed the 
requirements for 3R incentive plans as outlined in OPM's regulations, 
there were several instances where the policy omitted or did not 
clearly address certain important requirements. Clearly incorporating 
the regulatory requirements into the policy will help to ensure that 
managers and OPDIVs are using 3R incentives consistent with the law 
and regulations. According to a senior HHS official, HHS is reviewing 
the current 3R incentive policy and determining if updates are needed 
as part of its review of 3R incentives in response to OPM's directive 
to agencies in May 2009 to review their 3R incentive programs. We 
found that HHS's 3R incentive policy could be strengthened in the 
following areas. 

* Conditions for reducing or terminating an incentive. HHS's policy 
generally addressed the mandatory and discretionary conditions for 
reducing or terminating an employee's incentive payment and the 
agency's and employee's obligations with regard to notification, 
payments, and repayment of the incentive. However, HHS's policy 
incorrectly refers to a condition for reducing or terminating a 
retention incentive authorization as a discretionary (may) condition, 
when it should be documented as a mandatory (must) condition. 
Specifically, when no service agreement is required, payment of a 
retention incentive must be reduced or terminated when the original 
determination to pay the incentive no longer applies or when payment 
is no longer warranted at the level originally approved. Further, 
HHS's policy does not include a mandatory termination condition for 
retention incentives when no service agreement is required due to the 
employee being demoted or separated for cause or the employee 
receiving a rating of less than "fully successful." The policy only 
discusses this condition for retention incentives with service 
agreements. HHS officials acknowledged these errors in the 3R 
incentive policy and stated that the policy should be corrected and 
more specific than the general rules for terminating service 
agreements that are currently in the policy. Not correctly specifying 
the mandatory and discretionary conditions for reducing or terminating 
3R incentives and service agreements could hinder OPDIVs' 
interpretation and understanding of these conditions when reductions 
or terminations of the incentives may be in order. 

* Annual review of retention incentives with no service agreement. OPM 
regulations state that for retention incentives that are paid when no 
service agreement is required, an agency must review each 
determination to pay the incentive at least annually to determine 
whether payment is still warranted and certify this determination in 
writing. HHS's policy does not provide that retention incentives paid 
biweekly, which require no service agreements, need to be reviewed 
annually. According to HHS officials, HHS does not provide any 
guidance on this requirement; it is up to the OPDIVs to determine how 
they will review their incentives, including the annual review for 
retention incentives without service agreements. The officials stated 
that they plan to build a check of this requirement into the future 
accountability reviews of 3R incentives across HHS. 

* Conditions for repayment of an incentive. According to OPM 
regulations, if a 3R incentive service agreement is terminated due to 
employee fault or failure related to performance, the employee can 
retain payments received for completed work, but the agency does not 
have to pay the amount attributed to completed work that has not been 
received unless agreed to in the service agreement, nor is the agency 
obligated to pay any incentive payments attributable to uncompleted 
service. HHS's policy on the department's obligations in the event of 
the termination of a 3R incentive is not clear, suggesting that an 
agency may be obligated to make outstanding payments attributed to 
uncompleted service if provided for in a service agreement, which is 
not permissible when terminated due to employee fault. 

According to an HHS official, HHS has not yet awarded retention 
incentives to employees who would be likely to leave for a different 
position in the federal service before the closure or relocation of 
the employee's office or organization. HHS's policy does not address 
all the regulatory requirements that apply when using retention 
incentives in this manner, such as the requirement that these 
incentives cannot be paid in biweekly installments at the full 
incentive percentage rate. A senior HHS official said HHS has not yet 
determined if it will update the policy to document these requirements 
because it has not yet used this type of incentive. Moving forward, 
HHS should have the policy in place before using this type of 
retention incentive to help ensure the OPDIVs use this flexibility in 
a manner that meets the approval of HHS and regulatory requirements. 

HHS Monitors and Periodically Conducts Accountability Reviews of Its 
OPDIVs' Human Capital Systems Including the Use of 3R Incentives: 

OPM regulations require agencies to monitor the use of 3R incentives 
to ensure the incentive plan and payments are consistent with the law 
and regulatory requirements. In its 3R incentive policy, HHS assigns 
its OPDIVs the responsibility of ongoing monitoring of 3R incentives 
to ensure compliance with regulations and HHS policy. HHS does not 
uniformly review the OPDIVs' guidance outlining the internal process 
they follow or 3R incentive forms, but a senior HHS official stated 
that HHS provides advice to OPDIVs when requested or required. While 
its ongoing monitoring of 3R incentives has been minimal in the past, 
according to another senior HHS official, HHS is planning to take a 
more active role in light of its recent review of 3R incentives in 
response to OPM's directive to agencies in May 2009 to review their 3R 
incentive programs. The official stated that HHS is deciding how to 
implement the results of its 3R incentive review and build ongoing 
monitoring and future reviews of 3R incentives into the existing human 
capital accountability reviews conducted by the Office of Human 
Resources. 

Providing further oversight of 3R incentives, HHS's Human Capital and 
Accountability Division within the Office of Human Resources conducts 
accountability reviews of the OPDIVs' human capital systems, including 
the use of 3R incentives as part of OPM's Human Capital Assessment and 
Accountability Framework requirements. The purpose of the 
accountability reviews is to ensure the OPDIV's' human capital 
programs and policies are effective and adhere to merit system 
principles and other pertinent laws and regulations. In response to 
HHS's recommendations and required actions as a result of its reviews, 
an HHS official responsible for conducting the accountability reviews 
said the OPDIVs are asked to respond to all recommendations and 
required actions identified by HHS, but HHS only requires a response 
to the required actions, which are legal or regulatory violations. 
Moving forward, the official said that HHS plans to conduct its 
accountability reviews of departmentwide programs, such as 3R 
incentives, instead of the OPDIV-specific reviews, to enable the audit 
team to examine specific details of the programs across HHS, which the 
current approach does not allow. HHS is planning an accountability 
program review of 3R incentives in fiscal year 2010. 

For its accountability review of FDA in fiscal year 2007, HHS reviewed 
FDA's compensation strategies, including 3R incentives, and reported 
that they helped attract and retain quality employees. As part of the 
review, HHS said the team reviewed 13 group retention incentive 
actions at FDA to ensure that the files were completed properly and 
contained correct documentation. HHS did not identify any required 
actions for FDA on 3R incentives or other aspects of its human capital 
system, but it did identify a number of recommendations for 
improvements in the human capital area including one specific to 
retention incentives. HHS found that overall FDA's retention policies 
and practices appear to meet the requirements of HHS policy and other 
governmental guidelines. However, HHS reported that FDA had not 
incorporated the use of retention tools into its workforce plan and 
recommended that FDA identify existing retention tools, analyze their 
effectiveness, and incorporate retention strategies into the FDA 
workforce plan. According FDA's Assistant Commissioner for Management, 
FDA plans to address this recommendation in the scheduled update of 
its strategic workforce plan in fiscal year 2010. HHS has not reviewed 
FDA since fiscal year 2007 and plans to include FDA as part of its 
scheduled program review of 3R incentives for fiscal year 2010. 

Conclusions: 

Federal agencies have a number of available flexibilities, including 
3R incentives, to help them strategically manage their workforces. 
OPM's call to agencies to review their 3R incentive programs has 
raised awareness about the importance of ensuring that current and 
future incentives are used only when necessary to support agency 
mission and program needs. FDA, OPM, and HHS have an opportunity to 
make further improvements to internal controls and oversight of 3R 
incentives. FDA lacks an updated strategic workforce plan that would 
help it determine how its use of 3R incentives is contributing to its 
human capital goals. Despite positive enhancements over the past 3 
years, FDA's internal controls have weaknesses related to requesting, 
approving, and processing 3R incentive requests. Strong internal 
controls help provide assurance that 3R incentives are used 
efficiently and effectively. 

As for oversight, OPM requiring all federal agencies to incorporate 
succession planning in the decision process for awarding retention 
incentives would help to ensure that agencies consider other effective 
means to acquire and retain talent. Clearly incorporating important 
requirements into HHS's 3R incentive policy will help to ensure that 
managers and OPDIVs are using 3R incentives consistent with the law 
and regulations. 

Recommendations for Executive Action: 

To better align the use of 3R incentives with the agency's human 
capital goals, we recommend that the Commissioner of FDA update FDA's 
strategic workforce plan to document the agency's recruitment and 
retention goals and strategies and as part of that update, identify 
indicators to better track the progress of 3R incentives over time in 
addressing the agency's recruitment and retention goals. 

As FDA implements the results of its 2009 review of 3R incentives, we 
recommend that the Commissioner of FDA continue to strengthen FDA's 
internal controls for requesting, approving, and processing 3R 
incentives by taking the following two actions: 

* update the guidance for awarding 3R incentives to include the 
payment method used for retention incentives and all the conditions 
for terminating a retention incentive when no service agreement is 
required, and: 

* ensure 3R incentive files are properly completed and reviewed to 
address policy and regulatory requirements before the employees 
receive the incentive payments. 

As OPM implements the results of its governmentwide 3R incentive 
review, we recommend that the Director of OPM require agencies to 
incorporate succession planning efforts into the decision process for 
awarding retention incentives and document this requirement for 
succession planning in their 3R incentive plans. 

To ensure the department and OPDIVs are aware of HHS's policy in all 
areas of 3R incentives and use these incentives consistent with law 
and OPM regulations, we recommend that the Secretary of HHS revise 
HHS's 3R incentive policy to ensure that the guidance provided clearly 
addresses certain important requirements outlined in the regulations. 

Agency Comments and Our Evaluation: 

We provided a copy of the draft report to the Secretary of HHS and 
Director of OPM for their review and comment. HHS's Acting Assistant 
Secretary for Legislation provided written comments that included 
comments from FDA (see appendix III). FDA generally agreed with our 
recommendations. FDA stated that it will continue to review its 3R 
incentives to ensure that their use is consistent with the agency's 
guidance for the use of 3R incentives. In response to its 
recommendation, HHS acknowledged the need to revise its 3R incentive 
policy and stated that it is in the process of reviewing and making 
the appropriate changes. HHS also provided technical comments on the 
draft report, which we incorporated as appropriate. 

OPM provided written comments, which are included in appendix IV. OPM 
agreed with our recommendation and stated that it will develop future 
guidance on the importance of considering succession planning in the 
decision process for awarding retention incentive. OPM stated that it 
is working with agencies to review the 3R incentive program and its 
current regulations, guidance, and monitoring policies to identify 
areas where improvements can be made, such as developing and using 
metrics to monitor and evaluate 3R incentive usage. OPM also provided 
technical comments on the draft report, which we incorporated as 
appropriate. 

As we agreed with your offices, unless you publicly announce the 
contents of this report earlier, we plan no further distribution of it 
until 30 days from the date of this letter. At that time, we will send 
copies of this report to the appropriate congressional committees, the 
Secretary of HHS, Commissioner of FDA, Director of OPM, and other 
interested parties. The report will also be available at no charge on 
the GAO Web site at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions regarding this report, please 
contact me at (202) 512-6806 or goldenkoffr@gao.gov. Contact points 
for our Offices of Congressional Relations and Public Affairs may be 
found on the last page of this report. GAO staff who made major 
contributions to this report are listed in appendix V. 

Signed by: 

Robert N. Goldenkoff: 
Director, Strategic Issues: 

[End of section] 

Appendix I Objectives, Scope, and Methodology: 

This report examines (1) the extent to which the Food and Drug 
Administration (FDA) is linking its use of recruitment, relocation, 
and retention (3R) incentives to its strategic human capital 
approaches to address its current and emerging challenges; (2) the 
extent to which FDA's 3R incentives were awarded consistent with the 
law, regulations, and guidance and the internal controls FDA has in 
place to ensure proper disbursement of 3R incentives and encourage 
efficient use; and (3) the steps the Office of Personnel Management 
(OPM) has taken to help ensure that agencies, including the Department 
of Health and Human Services (HHS), have effective strategic oversight 
of their 3R incentive programs, and how HHS is providing oversight of 
its 3R incentive program. 

To address our first objective, we collected and analyzed aggregate 
pay data as provided by HHS on the amount and number of 3R incentives 
by various categories for employees in FDA and the rest of HHS from 
January 1, 2007, through July 4, 2009, and data on FDA's workforce 
from OPM's Central Personnel Data File (CPDF) for fiscal year 2008. 
[Footnote 40] To describe FDA's use of 3R incentives and draw a 
comparison to the rest of HHS, we analyzed and compared the data on 
FDA and the rest of HHS to determine the number of each type of 3R 
incentive provided to employees and the aggregate distributions across 
various categories including duty location, pay plan, and occupational 
series by calendar year. Using the HHS pay data, we calculated the 
percentage of FDA and HHS total numbers of 3R incentives and total 
expenditures on these incentives, the mission-critical occupational 
series' percentage of FDA's total number of 3R incentives with mission-
critical occupations as defined by FDA, the average distribution of 
FDA 3R incentives by top occupational series, and the distribution of 
FDA 3R incentives by pay plan. 

To compare the use of 3R incentives in FDA with trends in its 
workforce, using data from CPDF, we calculated FDA retirement 
eligibility by occupational series for career permanent employees, 
[Footnote 41] and FDA's percentage of HHS's total workforce. As a 
point of comparison on the governmentwide use of 3R incentives, we 
reviewed OPM's Recruitment, Relocation, and Retention Incentives 
Calendar Year 2007: Report to the Congress, issued in September 2008, 
and identified the total dollar amount spent on 3R incentives in 2007. 
We checked the HHS data for reasonableness and the presence of any 
obvious or potential errors in accuracy and completeness. We conducted 
interviews with selected HHS officials knowledgeable about the data, 
and brought to the attention of these officials any concerns or 
discrepancies we found with the data for correcting or updating and 
further clarification. On the basis of these procedures, we believe 
the data provided by HHS are sufficiently reliable for use in the 
analyses presented in this report. In addition, we believe the CPDF is 
sufficiently reliable for the informational purpose of this report. 
[Footnote 42] 

To identify linkage with the use of 3R incentives and FDA's human 
capital documents, we analyzed FDA's Fiscal Year 2006 Workforce Plan-- 
the most recent workforce plan available--and FDA's Succession Plan 
2009-2012. We also conducted interviews with FDA officials about the 
trends we identified in the 3R incentives pay data, FDA's strategic 
human capital approaches and how the use of 3R incentives fits into 
broader human capital decisions at the agencywide and center-specific 
levels, and how the agency tracks the use of 3R incentives to assess 
the effectiveness of these payments and how they contribute to FDA's 
broader human capital goals. 

To address our second objective, we identified all elements that are 
required to be included in documenting the awarding of an incentive. 
We analyzed applicable provisions of title 5 of the United States 
Code, OPM regulations, HHS policy, and FDA guidance, and interviewed 
HHS, FDA, and OPM officials to create a data collection instrument 
identifying the applicable requirements. We used this data collection 
instrument to analyze a sample of 3R incentives awarded by FDA in 2007 
and 2008 in order to determine the extent to which documentation 
elements required for the awarding of 3R incentives were present. 

To review the FDA 3R incentive files, we took a stratified sample. We 
looked at new incentives for three categories of incentive files-- 
recruitment, relocation, and retention--from 2007 and 2008. There were 
2,056 incentive actions in this population from January 1, 2007, to 
October 31, 2008. We randomly selected files for review from each set, 
or stratum, of incentive actions for each category and year, except 
for three strata where we reviewed all of the files due to the small 
population size. Our sample size was 107 files, with the number of 
selected files per stratum shown in table 2. 

Table 2: FDA 3R Incentive Population Size and Number of Random Case 
Selections by Stratum: 

Stratum: 2007 Relocation; 
Population: 5; 
Sample size: 5; 
Number of out-of-scope cases: 0. 

Stratum: 2007 Retention; 
Population: 807; 
Sample size: 37; 
Number of out-of-scope cases: 0. 

Stratum: 2007 Recruitment; 
Population: 1; 
Sample size: 1; 
Number of out-of-scope cases: 0. 

Stratum: 2008 Relocation; 
Population: 7; 
Sample size: 7; 
Number of out-of-scope cases: 0. 

Stratum: 2008 Retention; 
Population: 898; 
Sample size: 41; 
Number of out-of-scope cases: 2. 

Stratum: 2008 Recruitment; 
Population: 338; 
Sample size: 16; 
Number of out-of-scope cases: 0. 

Stratum: Total; 
Population: 2,056; 
Sample size: 107; 
Number of out-of-scope cases: 2. 

Source: GAO. 

[End of table] 

Subsequent analysis of the 107 files showed that 2 of the files were 
not in the scope for this review, leaving us with a random sample of 
105 files. We applied our data collection instrument to the random 
sample of 105 files to determine whether each file contained all the 
elements that needed to be documented in the awarding of a 3R 
incentive. Each incentive file was weighted so that our random sample 
statistically represented the population in each stratum. 

Because we followed a probability procedure based on random 
selections, our sample of 3R incentive files was only one of a large 
number of samples that we might have drawn. Because each sample could 
have provided different estimates, we express our confidence in the 
precision of our particular sample's results in 95 percent confidence 
intervals. These are intervals that would contain the actual 
population values for 95 percent of the samples we could have drawn. 
As a result, we are 95 percent confident that each of the confidence 
intervals in this report will include the true values in the study 
population. All percentage estimates from the 3R incentive file review 
have margins of error at the 95 percent confidence level of plus or 
minus 10 percentage points or less, unless otherwise noted. 

The practical difficulties of utilizing any data collection instrument 
may introduce errors, commonly referred to as nonsampling errors. For 
example, difficulties in how a particular question is interpreted, in 
the sources of information that are available to respondents, or in 
how the data are entered into a database or were analyzed can 
introduce unwanted variability into the results. We took steps in the 
development of the instrument, the data collection, and the data 
analysis to minimize these nonsampling errors, including providing 
detailed instructions of the data collection instrument. In addition, 
we had a second independent reviewer for the data analysis to further 
minimize such errors. 

We interviewed OPM officials to help understand OPM's policy on 
oversight of 3R incentives and the regulations, their interpretation 
of HHS's policy and FDA's guidance on 3R incentives, and how the 
results of the file review were viewed in this context. We did not ask 
OPM to review HHS's policy or FDA's guidance on 3R incentives as part 
of our review. We also interviewed FDA officials to discuss their 
internal controls relating to the awarding and oversight of 3R 
incentives, and how the findings of our review fit within the context 
of their oversight. We reviewed FDA's most recent review of its policy 
and usage of 3R incentives to identify revisions that were made to 
internal controls. 

To address the third objective, we analyzed OPM's guidance on 3R 
incentives including regulations, memorandums, and fact sheets; 
templates for its human capital evaluations; and the 3R incentive 
report to Congress for calendar year 2007. We also interviewed 
cognizant officials from the two divisions in OPM that are responsible 
for developing the 3R incentive regulations and annual reports and 
monitoring agencies' use of 3R incentives. To obtain information on 
HHS's oversight of 3R incentives, we analyzed HHS's 3R incentive 
policy to determine consistency with OPM regulations on 3R incentives, 
HHS's fiscal year 2007 human capital accountability review of FDA to 
identify relevant findings on 3R incentives, and other relevant 
documentation; interviewed senior-level HHS officials responsible for 
implementing the 3R incentive policy and conducting accountability 
reviews of the operating divisions' human capital management systems 
including 3R incentives; and interviewed senior-level FDA officials 
familiar with HHS's monitoring and oversight of 3R incentives. 

We conducted our work from December 2008 through January 2010 in 
accordance with generally accepted government auditing standards. 

[End of section] 

Appendix II: Highlights of the Food and Drug Administration 3R 
Incentive File Review Results: 

The following table provides examples of the results for our review of 
FDA's 3R incentive files. We reviewed the files of a random, 
stratified sample of 3R incentives awarded from January 2007 through 
October 2008 to determine whether they met requirements in law, OPM 
regulations, HHS policy, and FDA guidance.[Footnote 43] 

Table 3: Examples of How FDA's 3R Incentive Files Addressed Selected 
Requirements: 

Required forms: 

Requirements for 3R incentive files according to law, OPM regulations, 
HHS policy, or FDA guidance: Incentive request: An FDA form that 
outlines descriptive information, such as the employee's name, pay 
series, and incentive amount, and documents the approving signatures; 
How FDA 3R incentive files addressed requirements: We estimate that 
all 3R incentive files contained the request form for the incentive.[A] 

Requirements for 3R incentive files according to law, OPM regulations, 
HHS policy, or FDA guidance: Justification for the incentive request: 
Documents the need for the incentive and the reason why the incentive 
is warranted according to regulatory and policy requirements and 
includes supplemental information, such as salary surveys, to support 
justification; 
How FDA 3R incentive files addressed requirements: We estimate that 
about 95 percent of 3R incentive files contained the justification for 
the incentive request.[B] Further, we estimate that about 83 percent 
of 3R incentive files contained supporting documentation, 
predominantly salary surveys,[C] used to support the need for the 
incentive. 

Requirements for 3R incentive files according to law, OPM regulations, 
HHS policy, or FDA guidance: Service agreement: A written agreement 
the employee must sign before receiving the incentive to complete a 
specified period of employment with the agency prior to receiving the 
incentive. Regulations require service agreements for recruitment and 
relocation incentives, but not for retention incentives when the 
incentive is paid on a biweekly basis at the full percentage amount: 
* FDA requires service agreements for recruitment and relocation 
incentives, but does not use service agreements for retention 
incentives because it pays these incentives in biweekly installments 
at the full percentage amount; 
How FDA 3R incentive files addressed requirements: All recruitment 
incentive files we reviewed, and 11 of the 12 relocation incentive 
files we reviewed, contained a service agreement. None of the 
retention incentive files had an agreement as allowed by 
regulations.[D] 

Requirements for 3R incentive files according to law, OPM regulations, 
HHS policy, or FDA guidance: Standard Form (SF) 50: A notification of 
the personnel action for the incentive payment to help ensure the 
authorization was processed accordingly; 
How FDA 3R incentive files addressed requirements: We estimate that 
all 3R incentive files contained the SF-50 showing the proper payment 
authorization.[E] 

Approval of the incentive request: 

Requirements for 3R incentive files according to law, OPM regulations, 
HHS policy, or FDA guidance: Recommending official signature: FDA 
requires the center director or a deputy commissioner to officially 
request the incentive and sign the request form[F]; 
How FDA 3R incentive files addressed requirements: We estimate that 
about 99 percent of 3R incentive files were signed by the recommending 
official, or a proxy on his or her behalf.[G] 

Requirements for 3R incentive files according to law, OPM regulations, 
HHS policy, or FDA guidance: Approving official signature: FDA's 
Commissioner is the approving official who is to officially approve or 
disapprove all incentive requests and sign the request form: 
* From 2007 through 2008, FDA allowed the Deputy Commissioner for 
Operations/Chief Operating Officer to sign for the Commissioner and 
approve the requests. According to an HHS official, this delegation of 
approval is consistent with HHS policy and OPM regulations; 
How FDA 3R incentive files addressed requirements: We estimate that 
all of the 3R incentive files were signed by the approving official[H] 
or a designee on his behalf. For most of the files, the Deputy 
Commissioner for Operations/Chief Operating Officer signed as a 
designee for the Commissioner as the approving official. 

Eligibility conditions for 3R incentives: 

Requirements for 3R incentive files according to law, OPM regulations, 
HHS policy, or FDA guidance: Eligible categories of employees: As 
provided for by statute, OPM regulations identify the categories of 
eligible employees including positions in or whose pay is set at the 
General Schedule (GS), senior-level or scientific or professional, 
Senior Executive Service (SES), law enforcement officers, Executive 
Schedule, prevailing rate, and other positions approved by OPM: 
* Employees appointed pursuant to 42 U.S.C.  209(f) and 209(g) are 
not eligible to receive 3R incentives pursuant to the authorities at 5 
U.S.C.  5753 or 5754. Rather, their compensation is authorized 
pursuant to these appointment provisions which permit HHS flexibility 
in setting compensation for those appointed. FDA began phasing out the 
use of retention incentives for these employees starting in 2007; 
How FDA 3R incentive files addressed requirements: We estimate that 
all 3R incentives were awarded to eligible categories of employees.[I] 

Requirements for 3R incentive files according to law, OPM regulations, 
HHS policy, or FDA guidance: Newly appointed employee for recruitment 
incentives: An employee must be in the first appointment in the 
federal government or meet the regulatory definition for newly 
appointed in order to be eligible to receive a recruitment incentive; 
How FDA 3R incentive files addressed requirements: All recruitment 
incentive files we reviewed contained documentation supporting that 
the recipient was newly appointed to the federal government. 

Requirements for 3R incentive files according to law, OPM regulations, 
HHS policy, or FDA guidance: Current employee for relocation and 
retention incentives: An employee must be an employee in the federal 
government immediately before the relocation or receiving the 
retention incentive payment; 
How FDA 3R incentive files addressed requirements: 10 of 12 of the 
relocation incentive files contained documentation supporting that the 
incentive was given to an employee in the federal government 
immediately before receiving the incentive. All retention incentives 
we reviewed were given to current FDA employees. 

Aggregate pay limitation: 

Requirements for 3R incentive files according to law, OPM regulations, 
HHS policy, or FDA guidance: Aggregate pay limitation: Payment of 3R 
incentives is subject to an aggregate pay limit under 5 U.S.C.  5307 
which limits compensation received in any calendar year to an amount 
equal to the rate for level I of the Executive Schedule or, for 
employees in SES positions covered by a certified performance 
appraisal system, equal to the annual compensation payable to the Vice 
President.[J] For FDA's GS employees, the amounts were $186,600 and 
$191,300 for 2007 and 2008, respectively. For FDA's SES employees, 
which are covered under HHS's certified appraisal system, the amounts 
were $215,700 and $221,100 for 2007 and 2008, respectively: 
* For FDA employees appointed under the authority of 42 U.S.C.  
209(f) and 209(g), the aggregate pay limit under section 5307 does not 
apply to payments authorized outside of title 5. HHS has established 
aggregate pay limits for these title 42 positions, which for its 
209(g) employees, reflect the limit required under section 5307 for 
FDA's GS employees. For its 209(f) employees, the aggregate pay limit 
was $375,000 for 2007 and 2008; 
How FDA 3R incentive files addressed requirements: We estimate that 
all employees' 3R incentive payments were within applicable aggregate 
pay limits for the year as set by statute or HHS.[K] 

Source: GAO analysis of law, OPM regulations, HHS policy, FDA 
guidance, and a sample of FDA 3R incentive files. 

[A] The 95 percent confidence interval for this estimate is from 97.2 
to 100 percent. 

[B] The 95 percent confidence interval for this estimate is from 88.3 
to 98.3 percent. 

[C] The 95 percent confidence interval for this estimate is from 76.4 
to 87.6 percent. 

[D] 1 of 1 and 16 of 16 recruitment incentive files from 2007 and 
2008, respectively, and 0 of 37 and 0 of 39 retention incentive files 
from 2007 and 2008, respectively. 

[E] The 95 percent confidence interval for this estimate is from 97.2 
to 100 percent. 

[F] FDA requires the center directors/Associate Commissioner for 
Regulatory Affairs, or within the Office of the Commissioner, the 
deputy commissioners/Chief Counsel or Chief of Staff, as applicable, 
to officially request the incentive and sign the request form. 

[G] The 95 percent confidence interval for this estimate is from 95.0 
to 100 percent. 

[H] The 95 percent confidence interval for this estimate is from 97.2 
to 100 percent. 

[I] The 95 percent confidence interval for this estimate is from 97.2 
to 100 percent. 

[J] 5 U.S.C.  5307(d) provides for the higher aggregate pay limit for 
SES positions (or senior-level or scientific or professional positions 
paid under 5 U.S.C.  5376) in agencies with systems that have been 
certified by OPM with Office of Management and Budget concurrence as 
having performance appraisal systems which, as designed and applied, 
make meaningful distinctions based on relative performance. 5 C.F.R. 
part 530, subpart B and part 430, subpart D. 

[K] The 95 percent confidence interval for this estimate is from 97.2 
to 100 percent. 

[End of table] 

[End of section] 

Appendix III: Comments from the Department of Health and Human 
Services: 

Department Of Health & Human Services: 
Office Of The Secretary: 
Assistant Secretary for Legislation: 
Washington, DC 20201: 

December 29, 2009: 

Robert N. Goldenkoff: 
Director, Strategic Issues: 
U.S. Government Accountability Office: 
441 G Street N.W. 
Washington, DC 20548: 

Dear Mr. Goldenkoff: 

Enclosed are comments on the U.S. Government Accountability Office's 
(GAO) report entitled: "Human Capital: Continued Opportunities Exist 
for FDA and OPM to Improve Oversight of Recruitment, Relocation, and 
Retention Incentives" (GA0-10-226). 

The Department appreciates the opportunity to review this report 
before its publication. 

Sincerely, 

Signed by: 

Andrea Palm: 
Acting Assistant Secretary for Legislation: 

Enclosure: 

[End of letter] 

General COMMENTS FROM THE DEPARTMENT OF HEALTH AND HUMAN SERVICES 
(HHS) On The Government Accountability Office's (GAO) Draft Report 
Entitled: "Human Capital: Continued Opportunities Exist For FDA And 
OPM To Improve Oversight Of Recruitment, Relocation, And Retention 
Incentives" (GAO-10-226): 

The Department appreciates the work that GAO has recently completed on 
the study entitled, Human Capital: Continued Opportunities Exist for 
FDA and OPM to Improve Oversight of Recruitment, Relocation, and 
Retention Incentives. 

FDA leadership is taking advantage of these opportunities for improved 
oversight. We have already taken major steps over the last year, and 
we accept GAO's recommendations for additional changes. 

In April 2009, FDA dissolved and reconstituted the FDA Executive 
Review Board (ERB). Chaired by Principal Deputy Commissioner Dr. 
Joshua Sharfstein, the ERB now includes the agency's seven Center 
Directors, the Associate Commissioner for Policy, and the Assistant 
Commissioner for Management. The ERB is responsible for reviewing all 
compensation programs across the FDA. 

The first charge for the ERB was to develop Guiding Principles for the 
use of 3R incentives. These principles put additional restrictions on 
the use of these incentives, beyond those required by law or 
regulation. 

Recruitment: 

The ERB has assessed the agency's use of recruitment incentives. It 
concluded that based upon the current status of the job market, FDA 
would end the routine use of recruitment incentives. Since June 1, 
2009, the ERB has not approved any new recruitment incentives and FDA 
anticipates that the use of recruitment incentives will dramatically 
decrease in 2009 as compared to 2008. 

Relocation: 

The ERB reviewed the current use of relocation incentives and found 
these incentives to be rarely awarded and a potentially effective and 
appropriate tool for key personnel. In FY 2008, eight employees 
received the incentives. There were zero relocation incentives awarded 
in FY 2009, and zero so far in FY 2010. 

Retention: 

The ERB reviewed every existing categorical and individual retention 
incentive. At the time of the ERB's review, 343 employees had received 
categorical retention incentives and 171 individual employees had 
received individual retention incentives. FDA had already dropped the 
use of retention incentives in Title 42. 

FDA's review of categorical incentives found that the agency hires 
many scientists with specialized knowledge in such fields as 
mathematical statistics, pharmacology, pharmacokinetics, and 
toxicology in competition with much higher-paying private sector jobs. 
These incentives have been critical for FDA to retain critical human 
capital and are far more efficient than a continual turnover in 
regulatory scientists. 

In its initial re-review of individual retention incentives, FDA 
revalidated 135 of the 171 individual incentives based on the 
principles adopted. Of the 135, 31 were reduced for fiscal year 2010, 
and 7 of those that were not reduced have subsequently been eliminated. 

The FDA will continue to the review and revalidate the 3R incentives 
to ensure that the use of these incentives is consistent with the 
established Guiding Principles. 

Overall, the FDA is committed to effectively managing its 3R program 
and has implemented some program enhancements that are above and 
beyond the guidance that has been provided either by OPM or HHS. These 
enhancements include the implementation of human capital elements 
within the request for retention incentives that require managers to 
provide specific information about succession planning efforts when 
requesting a retention incentive. In addition, although OPM 
regulations do not place any restrictions on the number of
consecutive years an individual can receive a retention incentive, FDA 
has incorporated in its Guiding Principles and implemented a 5-year 
limit on the number of consecutive years that an individual can 
receive a retention incentive. In conjunction with the implementation 
of this 5-year maximum, each incentive is reviewed on an annual basis 
to determine if the original conditions still apply. The incentives 
are not automatically renewed. 

Response to Recommendations: 

GAO Recommendation: 

To better align the use of 3R incentives with the agency's human 
capital goals, we recommend that the Commissioner of FDA update FDA's 
strategic workforce plan to document the agency's recruitment and 
retention goals and strategies and as part of that update, identify 
indicators to better track the progress of 3R incentives over time in 
addressing the agency's recruitment and retention goals. 

FDA agrees with this recommendation. FDA has recently initiated a 
Human Capital and Workforce Planning effort that will encompass and 
document the agency's recruitment and retention goals. As part of that 
effort, FDA will put in place a mechanism to track and assess the 
progress of the 3R incentives. 

GAO Recommendation: 

As FDA implements the results of its 2009 review of 3R incentives, we 
recommend that the Commissioner of FDA continue to strengthen FDA's 
internal controls for requesting, approving, and processing 3R 
incentives by taking the following two actions: 

* Update the guidance for awarding 3R incentives to include the 
payment method used for retention incentives and all the conditions 
for terminating retention incentives when no service agreement is 
required. 

FDA agrees with this recommendation. FDA will update the existing 
guidance for 3R incentive payments to include specific controls that 
address payment method and conditions for terminating. 

* Ensure 3R incentive files are properly completed and reviewed to 
address policy and regulatory requirements before the employees 
receive the incentive payments. 

FDA agrees with this recommendation. FDA will coordinate with the 
Department of Health and Human Services, Office of Human Resources, to 
ensure that the cases are processed appropriately and properly 
documented prior to payment. 

GAO Recommendation: 

To ensure the Department and OPDIVs are aware of HHS's policy in all 
areas of 3R incentives and use these incentives in a manner that is 
consistent with law and OPM regulations, we recommend the Secretary of 
HHS revise the Department's 3R incentive policy to ensure that the 
guidance provided clearly addresses certain important requirements 
outline in the regulations. 

HHS acknowledges the need to revise its 3R policy and is in the 
process of reviewing and making the appropriate changes. 

[End of section] 

Appendix IV: Comments from the Office of Personnel Management: 

UNITED STATES OFFICE OF PERSONNEL MANAGEMENT: 
The Director: 
Washington, DC 20415: 

"Our mission is to ensure the Federal Government has an effective 
civilian workforce." 
[hyperlink, http://www.usajobs.gov] 
[hyperlink, http://www.opm.gov] 

December 20, 2009: 

Mr. Robert N. Goldenkoff: 
Director, Strategic Issues: 
U.S. Government Accountability Office: 
Washington, DC 20548: 

Dear Mr. Goldenkoff: 

Thank you for the opportunity to respond to the United States 
Government Accountability Office's (GAO's) draft report entitled Human 
Capital: Continued Opportunities Exist for FDA and OPM to Improve 
Oversight of Recruitment, Relocation. and Retention Incentives (GA0-10-
226). In the report, GAO examines the extent to which the Food and 
Drug Administration (FDA) is linking its use of recruitment, 
relocation, and retention incentives (3Rs) to its strategic human 
capital approaches to address its current and emerging challenges; the 
extent to which FDA's 3Rs were awarded consistent with regulations and 
internal FDA controls; and the steps the U.S. Office of Personnel 
Management (OPM) has taken to help ensure that agencies have effective 
oversight of their 3Rs programs and how the Department of Health and 
Human Services is providing oversight. 

I believe the 3Rs are important human resources tools that help 
agencies attract and retain employees for a model civilian workforce. 
However, these incentives must be used consistent with the law and 
OPM's regulations and paid only when necessary to support agency 
mission and program needs. As you are aware, OPM is working with 
agencies to review the 3Rs program and our current regulations, 
guidance, and monitoring policies to identify areas where improvements 
can be made. 

OPM has prepared the attached comments in response to your draft 
report. I look forward to working with GAO and other Federal agencies 
to strengthen the effectiveness of the 3Rs program. We appreciate the 
opportunity to comment on your report. 

Sincerely, 

Signed by: 
	
John Berry: 
Director: 

Enclosure: 

[End of letter] 

GAO Recommendation for OPM Action: 

GAO recommends: "OPM's 3R incentive guidance to agencies could more 
fully emphasize the importance of considering succession planning in 
the decision process for awarding retention incentives" (page 30). 

OPM Comments: OPM agrees with GAO's recommendation and will develop 
future guidance. 

GAO Views on the Use of Metrics: 

GAO states that OPM's annual 3Rs report to Congress could take a more 
results-oriented approach. (page 28) Specifically, it could include 
metrics to ensure incentives are being used effectively to address 
recruitment and retention goals. GAO states that continuing to have 
Governmentwide information on 3R incentives will provide OPM and 
policymakers with the information they need to help assess trends in 
the overall usage of the 3R incentive program across the Government 
and determine if changes are needed. 

OPM Comments: OPM's 3R report to Congress complies with the 
requirements of the Federal Workforce Flexibility Act (section 101(c) 
of Public Law 108-411). OPM has not expanded the report because of the 
already data-intensive burden on agency and OPM resources. However, we 
have been discussing ways to develop and use metrics with several 
agencies as well as ways to monitor and evaluate 3Rs usage. (If GAO 
has some specific recommendations, we would welcome receiving them.) 
We are starting a long-term project to review and validate 3Rs 
information in the Enterprise Human Resources Integration (EHRI) 
system and improve EHRI reporting definitions, standards, and edits. 
However, we have several competing needs for EHRI data and we cannot 
predict at this time when our project will be completed. Once 
completed, we would be able to extract 3R human resources and payroll 
information from the EHRI system on a biweekly basis rather than 
relying on separate reporting from agencies. Even so, we would still 
need to solicit additional 3Rs information from agencies, but it would 
be substantially less than what we request now. 

OPM's Oversight Role: 

GAO interviewed OPM officials to help understand OPM's policy on 
oversight of 3R incentives and 3R regulations, their interpretation of 
HHS's policy and FDA's guidance on 3R incentives, and how the results 
of the file review were viewed in this context. (page 43) 

OPM Comments: OPM did provide guidance to GAO on the issues contained 
in the report, as noted. However, GAO did not ask OPM to review a copy 
of HHS's policy or FDA's guidance on 3R incentives, nor did we conduct 
such a review as a result of this study. 

[End of section] 

Appendix V: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Robert N. Goldenkoff, (202) 512-6806, goldenkoffr@gao.gov: 

Staff Acknowledgments: 

In addition to the individual named above, Belva Martin, Acting 
Director; Carl Barden; David Bobruff; Sara Daleski; Karin Fangman; 
Peter Gilchrist; Wati Kadzai; Janice Latimer; Meredith Moore; Melanie 
Papasian; Jeffery Schmerling; and Gregory Wilmoth made major 
contributions to this report. 

[End of section] 

Footnotes: 

[1] GAO, High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-09-271] (Washington, D.C.: January 
2009). 

[2] Based on analysis of data from the U.S. Office of Personnel 
Management's Central Personnel Data File for fiscal year 2008, which 
were the most recent data available during the time of our review. 

[3] Federal Workforce Flexibility Act of 2004, Pub. L. No. 108-411, 
118 Stat. 2305 (Oct. 30, 2004); 5 U.S.C.  5753 and 5754. 

[4] OPM, Recruitment, Relocation, and Retention Incentives Calendar 
Year 2007: Report to the Congress (September 2008). This report was 
the most recently available data on governmentwide use of 3R 
incentives at the time of our review. 

[5] These were the most recent 3R incentive files available when we 
drew our sample. 

[6] See, 5 U.S.C. 5753 (a), 5754(a) and 5 C.F.R.  575.103, 575.203, 
575.303 for covered employees. See [hyperlink, 
http://www.opm.gov/oca/pay/HTML/3Rs_extensions.asp] for the list of 
single-agency pay systems for which OPM has approved 3R incentive 
coverage. 

[7] 5 C.F.R.  575.104, 575.204, 575.304. 

[8] Pursuant to OPM's authority under 5 U.S.C.  5371, OPM delegated 
to HHS the authority to use certain title 38 personnel authorities for 
health care occupations within two pay plans. The GP pay plan covers 
GS physicians and dentists paid market pay under 38 U.S.C.  7431(c) 
and the GR pay plan covers physicians and dentists covered by the 
Performance Management and Recognition System termination provisions 
who are paid market pay under 38 U.S.C.  7431(c). Employees under 
these pay plans are considered GS employees and therefore eligible for 
3R incentives. 

[9] At the request of HHS, OPM approved Senior Biomedical Research 
Service employees' eligibility to receive 3R incentives in 1999. 

[10] See, Pub. L. No. 101-509, 104 Stat. 1389 (Nov. 5, 1990). This act 
amended the Federal Pay Comparability Act of 1970 and other acts 
relating to federal employment. 

[11] OPM, Report of a Special Study: The 3Rs: Lessons Learned from 
Recruitment, Relocation, and Retention Incentives (1999) and GAO, 
Human Capital: Effective Use of Flexibilities Can Assist Agencies in 
Managing Their Workforces, [hyperlink, 
http://www.gao.gov/products/GAO-03-2] (Washington, D.C.: Dec. 6, 2002). 

[12] We analyzed data on FDA's workforce from OPM's CPDF for fiscal 
year 2008 (the most recent data available during the time of our 
review) and HHS provided data on 3R incentives awarded to employees in 
FDA and the rest of the department from January 1, 2007, through July 
4, 2009. 

[13] Consumer safety officers are charged with protecting consumers 
from foods, drugs, cosmetics, and other products and equipment that 
are impure, unwholesome, ineffective, improperly or deceptively 
labeled or packaged, or in some other way dangerous or defective. 

[14] FDA defines "top leadership" in its succession plan for 2009-2012 
as SES employees, employees whose pay is administratively determined, 
and GS-14 and GS-15 employees. 

[15] [hyperlink, http://www.gao.gov/products/GAO-03-2]. 

[16] Pharmacokineticists are among the scientists at FDA who determine 
the scientific validity of manufacturers' tests, drug safety, and 
efficacy claims. 

[17] Food and Drug Administration Amendments Act of 2007, Pub. L. No. 
110-85,  121 Stat. 823 (Sept. 27, 2007). 

[18] GAO, Federal Student Loan Repayment Program: OPM Could Build on 
Its Efforts to Help Agencies Administer the Program and Measure 
Results, [hyperlink, http://www.gao.gov/products/GAO-05-762] 
(Washington, D.C.: July 22, 2005). 

[19] [hyperlink, http://www.gao.gov/products/GAO-05-762]. 

[20] Our sample includes 17 recruitment, 12 relocation, and 76 
retention incentives. We reviewed the entire population of relocation 
incentives awarded from January 2007 through October 2008 so estimates 
on the population are not necessary. For recruitment and retention 
incentives, we are able to make population attribute estimates at the 
95 percent confidence level with an overall precision of +/-10.0 
percent for the time of our file review. While additional recruitment 
and relocation incentives may have been approved from October 31 to 
December 31, 2008, the list of incentive actions from which we drew 
our sample included all retention incentive actions in 2008 given 
FDA's quarterly review process for retention incentive requests. For 
more information on how the sample was drawn, see appendix I. 

[21] These factors are found at 5 C.F.R.  575.106(b), 575.206(b), 
and 575.306(b). 

[22] The 95 percent confidence interval for this estimate is from 97.2 
to 100 percent. 

[23] Generally, 5 U.S.C.  5307 limits payment of bonuses, awards, or 
other cash payments under title 5 in any given year when payments 
added to an employee's basic pay would exceed the rate payable for 
level I of the Executive Schedule. For FDA employees appointed under 
the authority of 42 U.S.C.  209(f) and 209(g), HHS states their 
compensation, including 3R incentive payments, is authorized pursuant 
to these appointment provisions, which permit HHS flexibility in 
setting compensation for those appointed. The aggregate pay limit 
under section 5307 does not apply to these incentive payments since 
they are not payments provided under title 5. However, HHS establishes 
aggregate pay limits for all such employees across HHS to which FDA 
adheres. Although we find that the aggregate pay limit under section 
5307 is not applicable to payments made to employees appointed under 
209(f) and 209(g), we express no opinion as to whether the cap on 
administratively determined pay under 5 U.S.C.  5373 should limit, as 
a matter of law, the pay levels established by HHS for these employees. 

[24] GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] 
(Washington, D.C.: November 1999). 

[25] The 95 percent confidence interval for this estimate is from 84.6 
to 96.6 percent. 

[26] The 95 percent confidence interval for this estimate is from 83.8 
to 100 percent. 

[27] For the recommending official, FDA requires the center directors/ 
Associate Commissioner for Regulatory Affairs or within the Office of 
the Commissioner, the deputy commissioners/Chief Counsel or Chief of 
Staff, as applicable, to officially request the incentive and sign the 
request form. 

[28] The 95 percent confidence interval for this estimate is from 0.1 
to 5.9 percent. 

[29] In order to obtain the date the employee established residence in 
the new geographic area, we reviewed information in HHS's human 
capital data system--the Enterprise Human Resources and Payment 
System--which HHS uses to centrally maintain personnel data for all 
employees. Specifically, we identified the date the employee's change 
of address request was processed and the previous location the agency 
had on file for each employee. We then compared the dates for change 
of address to the relocation incentive payment date. When the previous 
location for an employee was not recorded in the data system, we 
reviewed the employee's resume on file at FDA to identify the location. 

[30] In accordance with 5 U.S.C.  5754, regulations do not require a 
service agreement for retention incentives, if the agency pays the 
incentive in biweekly installments, and sets the biweekly installments 
at the full retention incentive percentage rate established for the 
employee. FDA pays all of its retention incentives in biweekly 
installments set at the full retention incentive percentage. Eleven of 
12 of the relocation incentive files and 1 of 1 and 16 of 16 of the 
recruitment incentive files from 2007 and 2008, respectively, 
contained service agreements. 

[31] The 95 percent confidence interval for this estimate is from 83.8 
to 100 percent. 

[32] Eleven of 12 of the relocation incentive files and 1 of 1 and 16 
of 16 of the recruitment incentive files from 2007 and 2008, 
respectively. 

[33] The 95 percent confidence interval for this estimate is from 1.5 
to 38.4 percent. 

[34] Five of 5 and 7 of 7 of the relocation incentive files from 2007 
and 2008, respectively, and 1 of 1 and 16 of 16 of the recruitment 
incentive files from 2007 and 2008, respectively. 

[35] The 95 percent confidence interval for this estimate is from 7.2 
to 52.4 percent. 

[36] 5 CFR 575.315(i). The requirement that agencies report annually 
on the use of retention incentives for employees likely to leave for 
another position in the federal service before the closure or 
relocation of the employee's facility or office does not have a sunset 
provision. 

[37] GAO, Human Capital: Succession Planning and Management is 
Critical Driver of Organizational Transformation, [hyperlink, 
http://www.gao.gov/products/GAO-04-127T] (Washington, D.C.: Oct. 1, 
2003). 

[38] Delegated examining reviews examine agencies' use of the 
authority granted by OPM to fill competitive civil service jobs. 
Appointments under this authority are subject to civil service laws 
and regulations to help ensure fair and open competition; recruitment 
from all segments of society; and selection on the basis of the 
applicants' competencies or knowledge, skills, and abilities. As part 
of this review, OPM reviews agencies' decisions to use hiring 
compensation incentives (e.g., recruitment and relocation incentives) 
to ensure they are appropriately documented and justified. 

[39] HHS, Human Resources Manual, Instruction 575-1, Change 1, 
Recruitment, Relocation and Retention Incentives (Dec. 15, 2008). 

[40] The CPDF is a database that contains individual records for most 
federal employees and is the primary governmentwide source for 
information on federal employees. 

[41] We calculated retirement eligibility by occupational series for 
career permanent employees. Career employees are employees with 
appointments that do not have an ending date or maximum length of 
service. 

[42] We previously reported that governmentwide data from the CPDF 
were 96 percent or more accurate. See GAO, OPM's Central Personnel 
Data File: Data Appear Sufficiently Reliable to Meet Most Customer 
Needs, [hyperlink, http://www.gao.gov/products/GAO/GGD-98-199] 
(Washington, D.C.: Sept. 30, 1998). Also, in a document dated February 
28, 2008, an OPM official confirmed that OPM continues to follow the 
CPDF data quality standards and procedures contained in our 1998 
report. 

[43] Our sample includes 17 recruitment, 12 relocation, and 76 
retention incentives. We reviewed the entire population of relocation 
incentives awarded from January 2007 through October 2008 so estimates 
to the population are not necessary. For recruitment and retention 
incentives, we are able to make population attribute estimates at the 
95 percent confidence level with an overall precision of +/-10.0 
percent for the time of our file review. 

[End of section] 

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