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

FPCD-82-44: Published: May 7, 1982. Publicly Released: May 7, 1982.

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

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

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Director of OPM, in coordination with the Director of OMB, should develop uniform, Government-wide procedures requiring contractors to provide the names of involuntarily separated employees who are offered comparable employment on or before contract conversion or who are hired within 90 days after contract conversion. This is necessary for agencies to enforce the OPM regulation. The Air Force's contractual controls appear to be reasonable and should be considered for inclusion in the procurement regulations as requirements for all agencies to follow.

    Agency Affected: Office of Personnel Management

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Director of OPM, in coordination with the Director of OMB, should alert all executive departments and agencies to the need to enforce the regulation.

    Agency Affected: Office of Personnel Management

 

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