Federal Downsizing:

Better Workforce and Strategic Planning Could Have Made Buyouts More Effective

GGD-96-62: Published: Aug 26, 1996. Publicly Released: Aug 26, 1996.

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Pursuant to a congressional request, GAO reviewed several issues related to the federal employee buyout program, focusing on: (1) whether the Federal Workforce Restructuring Act's downsizing goals are being achieved; (2) whether agencies' use of buyouts reflects National Performance Review (NPR) downsizing goals; (3) the demographic results of the buyouts; and (4) how agencies view buyouts as a downsizing tool.

GAO found that: (1) between January 1993 and March 1996, non-postal executive civilian employment decreased by 230,500 employees; (2) employee buyouts have minimized the use of reductions in force (RIF); (3) agencies have not met NPR restructuring goals, since the percentage of management positions has not significantly changed; (4) agencies often set lower downsizing goals for management positions, since they do not specifically target buyouts to these positions; (5) agencies that plan their buyouts have more successful outcomes; (6) buyouts have allowed agencies to increase the representation of minorities and women in the workforce, who likely would have been adversely affected by RIF; (7) 72 percent of buyouts have gone to employees taking regular or early retirement, and some employees may have delayed their separation so they could receive buyouts; (8) most agencies believe buyouts have been an effective downsizing tool, but downsizing has caused operational problems such as the loss of corporate memory and expertise, increased workloads and backlogs, skill imbalances, and more overtime; (9) some agencies believe that downsizing has hindered their ability to carry out their missions; (10) agencies have used reengineered work processes and automation to offset personnel reductions, but a few agencies are using contract employees, some of whom are buyout recipients; (11) outsourcing work may offset some downsizing benefits and be inconsistent with the act's purpose; and (12) agencies could have mitigated some of the adverse impacts of downsizing through better strategic and workforce planning.

Matters for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: Provisions for strategic and workforce planning were written into the governmentwide buyout authority (P.L. 104-208) as well as several pieces of agency specific buyout legislation.

    Matter: To ensure the most cost-effective use of any future buyouts and to help mitigate the adverse effects that can result from poorly planned downsizing, Congress, in reviewing H.R. 2751 or other legislation that would grant buyout authority to agencies, may wish to consider requiring agencies to do strategic and workforce planning as a prerequisite for receiving buyout authority and to implement downsizing consistent with the results of their planning efforts. To the extent possible, priority should be given to retaining those employees possessing the knowledge and skills necessary to accomplish the agency's work.

  2. Status: Closed - Implemented

    Comments: The governmentwide non-Defense agency buyout authority (P.L. 104-208) was considered quickly. Further, it was enacted September 30, 1996, and gave agencies the authority to begin offering buyouts the next day.

    Matter: To ensure the most cost-effective use of any future buyouts and to help mitigate the adverse effects that can result from poorly planned downsizing, Congress, in reviewing H.R. 2751 or other legislation that would grant buyout authority to agencies, may wish to consider ensuring that consideration of any buyout legislation is completed quickly and that buyouts, if approved, occur shortly thereafter. This will help reduce the number of employees who might delay their retirements and other types of separations in the expectation of receiving a buyout.

  3. Status: Closed - Not Implemented

    Comments: The buyout legislation approved by Congress following GAO's report typically did not generally contain any provisions on agencies' use of contractors to replace employees who took buyouts.

    Matter: To ensure the most cost-effective use of any future buyouts and to help mitigate the adverse effects that can result from poorly planned downsizing, Congress, in reviewing H.R. 2751 or other legislation that would grant buyout authority to agencies, may wish to consider clarifying the kinds of procurement actions (e.g., new contracts, task orders, modifications, etc.) that would be subject to the cost comparison requirement.

 

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