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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

July 2012: 

Human Capital: 

HHS and EPA Can Improve Practices Under Special Hiring Authorities: 

GAO-12-692: 

GAO Highlights: 

Highlights of GAO-12-692, a report to congressional requesters. 

Why GAO Did This Study: 

HHS and EPA have been using special hiring authority provided under 42 
U.S.C. §§209(f) and (g)-—referred to in this report generally as Title 
42 or specifically as section 209(f) or section 209(g)—-to appoint 
individuals to fill mission critical positions in science and medicine 
and, in many cases, pay them above salary limits usually applicable to 
federal government employees. GAO was asked to assess the extent to 
which HHS and EPA have (1) used authority under sections 209(f) and 
(g) to appoint and compensate employees since 2006, and (2) followed 
applicable agency policy, guidance, and internal controls for 
appointments and compensation. GAO analyzed agency Title 42 data, 
interviewed agency officials, and conducted file reviews. 

What GAO Found: 

The Department of Health and Human Services’ (HHS) use of special 
hiring authorities under 42 U.S.C. §§ 209(f) and (g) has increased in 
recent years. Nearly all HHS Title 42 employees work in one of three 
HHS operating divisions: the National Institutes of Health (NIH), the 
Food and Drug Administration (FDA), and the Centers for Disease 
Control and Prevention (CDC). 

Table: HHS Operating Divisions Have Increased Their Use of Title 42, 
Sections 209(f) and (g) Appointments, 2006 through 2010: 

Operating division: NIH; 
2006: 4,238; 
2007: 4,389; 
2008: 4,569; 
2009: 4,721; 
2010: 4,879; 
Percent change[A]: 15%%. 

Operating division: FDA; 
2006: 559; 
2007: 564; 
2008: 595; 
2009: 816; 
2010: 862; 
Percent change[A]: 54%. 

Operating division: CDC; 
2006: 512; 
2007: 603; 
2008: 708; 
2009: 796; 
2010: 929; 
Percent change[A]: 81%. 

Operating division: Other; 
2006: 52; 
2007: 45; 
2008: 44; 
2009: 38; 
2010: 27; 
Percent change[A]: (48%). 

Operating division: Total; 
2006: 5,361; 
2007: 5,601; 
2008: 5,916; 
2009: 6,371; 
2010: 6,697; 
Percent change[A]: 25%. 

Source: GAO analysis of HHS data. 

[A] Figures in parentheses indicate a decrease. 

[End of table] 

Title 42 employees at HHS serve in a variety of areas, including 
scientific and medical research support and in senior, director-level 
leadership positions. At NIH, one-quarter of all employees, and 44 
percent of its researchers and clinical practitioners, were Title 42 
appointees. HHS reported that Title 42 enables the agency to quickly 
fill knowledge gaps so medical research can progress and to respond to 
medical emergencies. HHS further reported Title 42 provides the 
compensation flexibility to compete with the private sector. In 2010, 
1,461 HHS Title 42 employees earned salaries over Executive Level IV 
($155,500 in 2010). 

HHS does not have reliable data to manage and provide oversight of its 
use of Title 42 because the section authority used to hire Title 42 
employees is not consistently recorded into personnel systems. 
Moreover, HHS did not consistently adhere to certain sections of its 
209(f) policy. For example, the policy states that 209(f) appointments 
may only be made after non-Title 42 authorities have failed to yield a 
qualified candidate, but GAO found few instances where such efforts 
were documented. HHS has recently issued updated 209(f) policy that 
addresses most of these issues. HHS is developing agencywide policy 
for appointing and compensating fellows under 209(g), but it is not 
clear the policy will address important issues such as documenting the 
basis for compensation. 

Since 2006, the Environmental Protection Agency (EPA) has used section 
209(g) to appoint 17 employees. Title 42 employees lead scientific 
research initiatives and some manage or direct a division or office. 
According to EPA officials, Title 42 provides the flexibility to be 
competitive in recruiting top experts who are also sought by private 
industry, academia, and others. Also, Title 42 provides the 
appointment flexibility needed to align experts with specific skills 
to changing scientific priorities. Fifteen of EPA’s 17 Title 42 
employees earned salaries over Executive Level IV in 2010. EPA 
appointment and compensation practices were generally consistent with 
its guidance; however, EPA does not have post-appointment procedures 
in place to ensure Title 42 employees meet ethics requirements to 
which they have previously agreed. 

What GAO Recommends: 

GAO recommends HHS (1) ensure section authority—209(f) or 209(g)—be 
consistently entered in appropriate personnel systems, (2) 
systematically document how policy requirements were fulfilled when 
hiring or converting 209(f) employees, and (3) ensure agencywide 
209(g) policy currently in development provides guidance for 
documenting the basis for employee compensation. GAO recommends EPA 
develop and document a systematic approach for ensuring Title 42 
employees are compliant with ethics requirements after appointment. 

HHS agreed with GAO’s recommendations, while EPA disagreed, citing 
certain actions already taken. GAO acknowledges EPA’s plans to address 
these issues, but maintains the recommendation is needed to ensure 
implementation. 

View [hyperlink, http://www.gao.gov/products/GAO-12-692]. For more 
information, contact Robert Goldenkoff at (202) 512-2757 or 
goldenkoffr@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

HHS Has Increased Its Use of Title 42, but More Reliable Data Could 
Improve HHS's Oversight: 

HHS Did Not Consistently Adhere to Sections of Its Title 42 Policy and 
Lacks Guidance for Some Authority Provisions: 

EPA Employs a Limited Number of Title 42 Fellows, Primarily in 
Leadership Roles: 

EPA Appointment and Compensation Practices Were Generally Consistent 
with Its Guidance, but EPA Could Improve Resolution of Potential 
Conflicts of Interest: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

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

Appendix III: Comments from the Environmental Protection Agency: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: HHS Operating Divisions Have Increased Their Use of Sections 
209(f) and (g) Appointments, 2006 through 2010: 

Table 2: NIH Relied on Title 42 for a Greater Percentage of Its Total 
Workforce and Research and Clinical Practitioners than FDA and CDC, 
2010: 

Table 3: Most Common Title 42 Occupations at NIH and Characteristics: 

Table 4: HHS Title 42 Employees with Base Salaries within or Exceeding 
Federal Executive Salary Levels, 2010: 

Table 5: HHS Compliance with Certain Sections of Its Policy for Hiring 
and Converting Employees Under Section 209(f) for Cases Reviewed: 

Table 6: Number of EPA Title 42 Fellows with Salaries in Federal 
Executive Salary Levels, 2010: 

Table 7: EPA Appointment and Compensation Practices Were Generally 
Consistent with Guidance: 

Figures: 

Figure 1: HHS Organizational Structure: 

Figure 2: Most Title 42, Sections 209(f) and (g) Employees Served at 
NIH, FDA, or CDC, 2010: 

Figure 3: Cumulative Number of EPA Title 42 Staff, 2006 through 2011: 

Abbreviations: 

CDC: Centers for Disease Control and Prevention: 

EHRP: Enterprise Human Resources and Payroll: 

EPA: Environmental Protection Agency: 

FDA: Food and Drug Administration: 

HHS: Department of Health and Human Services: 

NCCT: National Center for Computational Toxicology: 

NIH: National Institutes of Health: 

OGC: Office of General Counsel: 

ORD: Office of Research and Development: 

PHS: Public Health Service: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

July 9, 2012: 

The Honorable Denny Rehberg: 
Chairman: 
Subcommittee on Labor, Health and Human Services, Education, and 
Related Agencies: 
Committee on Appropriations: 
House of Representatives: 

The Honorable Cliff Stearns: 
Chairman: 
Subcommittee on Oversight and Investigations: 
Committee on Energy and Commerce: 
House of Representatives: 

The Honorable Joe Barton: 
House of Representatives: 

The Honorable Michael Burgess: 
House of Representatives: 

The Department of Health and Human Services (HHS) and the 
Environmental Protection Agency (EPA) are among the agencies that have 
cited difficulties in recruiting and retaining individuals in 
medicine, science, engineering, and other related fields in support of 
their missions. One reason for these difficulties, according to agency 
officials, is salaries available under typical federal government 
hiring authorities are sometimes not competitive with those in the 
private sector for individuals in these highly specialized and 
competitive fields. Since 2001, we have designated strategic human 
capital management a government-wide high-risk area in part because of 
the need to address current and emerging critical skills gaps that are 
undermining agencies' abilities to meet their missions.[Footnote 1] 

Effective use of various human capital flexibilities is one way 
agencies can improve their efforts to recruit, hire, and manage their 
workforces. Such flexibilities, provided under 42 U.S.C. §§209(f) and 
209(g)--referred to in this report generally as Title 42 or 
specifically as sections 209(f) or (g)--are available only to HHS and 
EPA.[Footnote 2] Section 209(f) authorizes the employment of special 
consultants to assist and advise in the operation of the Public Health 
Service (PHS), while section 209(g) authorizes fellowships in the PHS 
for scientists who may be assigned to studies and investigations for 
the term of their fellowships. HHS has used sections 209(f) and (g) 
and EPA has used section 209(g) to appoint individuals from the 
private sector and academia as well as to convert federal government 
employees under other pay systems--such as the General Schedule--to 
Title 42. 

In implementing Title 42, the agencies have set higher pay limits than 
those provided under typical civil service hiring authorities. 
[Footnote 3] Per HHS policy, the annual base salary for many 
appointments under Title 42 at HHS cannot exceed $250,000 per calendar 
year, with total compensation not to exceed $275,000 unless approved 
by the Secretary.[Footnote 4] In a related effort to this audit, we 
are issuing a legal opinion on whether there are any statutory caps on 
pay for consultants and fellows appointed under sections 209(f) and 
(g). Similarly, EPA policy caps annual base salary for Title 42 
employees at $250,000, with total compensation that may not exceed 
$275,000. According to HHS and EPA officials, the pay setting 
flexibility is needed to compete with the private sector and academia 
to recruit and retain critical personnel. Because agencies exercise 
broad discretion in their use of Title 42 authority, it is important 
that they have robust policies and internal control mechanisms in 
place to implement and monitor use of the authority. To obtain a 
better understanding of the appointment and compensation practices 
under sections 209(f) and 209(g), you asked us to assess the extent to 
which HHS and EPA (1) have used authority under sections 209(f) and 
(g) to appoint and set pay for employees since January 2006, and (2) 
have followed applicable agency policy, guidance, and internal 
controls for appointments and compensation.[Footnote 5] 

To assess the extent to which HHS and EPA have used authority under 
sections 209(f) and (g) to appoint and set pay for employees, we 
obtained agency personnel data that we analyzed to describe: (1) 
appointment and compensation trends at HHS and EPA since 2006, 
including the number of Title 42 employees; (2) the types of 
occupations and positions held by Title 42 employees; (3) compensation 
rates, including the number of Title 42 employees earning more than 
certain federal salary levels; (4) the number of Title 42 employees 
receiving nonsalary payments; and (5) the number of civil servants 
that have been converted to Title 42 appointments and the compensation 
changes associated with those conversions. We conducted a variety of 
data tests and interviews with agency officials to correct and refine 
HHS Title 42 data and were able to develop a data set that was 
reliable for our purposes. For EPA, we performed data testing, 
interviewed agency officials, and compared data to information found 
in official agency documents and determined that EPA's data were 
reliable for our purposes. To determine the extent to which HHS and 
EPA have followed applicable policy, guidance, and internal controls, 
we reviewed the policies and guidance at HHS and EPA to understand the 
conditions under which Title 42 employees are to be recruited, 
appointed, compensated, and managed. We conducted 63 case file reviews 
at HHS and 10 at EPA to document appointment and compensation 
practices and compared those practices to agency policies and 
guidance. Those cases were chosen based on a random selection of cases 
that had characteristics related to various areas of HHS's and EPA's 
Title 42 policy and guidance. We determined the number of case file 
reviews was sufficient to identify incidences where practices were or 
were not consistent with policies and guidance, but our findings are 
not generalizable to the entire population of Title 42 employees at 
HHS or EPA. See appendix I for a more detailed discussion of our 
objectives, scope, and methodology. 

We conducted this performance audit from May 2011 through July 2012 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: 

The authority to appoint and set pay for special consultants and 
fellows was provided as part of the Public Health Service Act in 1944. 
[Footnote 6] Section 209(f) authorizes the employment of special 
consultants to assist and advise in the operation of the PHS. The PHS 
is comprised of most operating divisions within HHS--including the 
National Institutes of Health (NIH), the Food and Drug Administration 
(FDA), and the Centers for Disease Control and Prevention (CDC)--as 
well as some staff divisions within the Office of the Secretary. See 
figure 1 for HHS's organizational structure, including those operating 
divisions and main staff divisions considered to be within the PHS. 
Section 209(g) authorizes fellowships in the PHS for individual 
scientists who may be assigned for studies and investigations either 
in the United States or abroad. Sections 209(f) and (g) both authorize 
the establishment of regulations to further implement these 
authorities. HHS Office of the Secretary develops agencywide policy 
and guidance and operating divisions may set additional or 
supplemental policy as necessary. In 2005, Congress provided EPA with 
the authority to use section 209 to make a limited number of 
appointments in its Office of Research and Development (ORD).[Footnote 
7] Congress initially granted this authority to EPA for fiscal years 
2006 through 2011, but Congress amended the authority twice and 
currently EPA is permitted to employ up to 30 persons at any one time 
through fiscal year 2015.[Footnote 8] EPA issued regulations in 2006 
implementing this authority, which closely follow HHS regulations. 
[Footnote 9] 

Figure 1: HHS Organizational Structure: 

[Refer to PDF for image: Organizational Structure] 

Secretary: 
* Deputy Secretary; 
* Chief of Staff; 
* The Executive Secretariat;  
* Office of Intergovernmental and External Affairs (EA); 
* Office of Health Reform (OHR); 
* Office on Disability (OD). 

Second level, reporting to the Secretary: 
Operating Divisions: 
* Administration for Children and Families (ACF); 
* Centers for Medicare and Medicaid Services (CMS); 
* Administration for Community Living (ACL); 
* Food and Drug Administration (FDA)[A]; 
* Agency for Healthcare Research and Quality (AHRQ)[A]; 
* Health Resources and Services Administration (HRSA); 
* Agency for Toxic Substances and Disease Registry (ATSDR)[A]; 
* Indian Health Service (IHS); 
* Centers for Disease Control and Prevention (CDC)[A]; 
* National Institutes of Health (NIH)[A]; 
* Substance Abuse and Mental Health Services Administration 
(SAMHSA)[A]. 

Second level, reporting to the Secretary: 
* Office of the Assistant Secretary for Administration (ASA); 
- Program Support Center (PSC); 
* Office of the Assistant Secretary for Financial Resources (ASFR); 
* Office of the Assistant Secretary for Health (DASH)[A]; 
- Office of the Surgeon General[A]; 
* Office of the Assistant Secretary for Legislation (ASL); 
* Office of the Assistant Secretary for Planning and Evaluation (ASPE); 
* Office of the Assistant Secretary for Preparedness and Response 
(ASPR); 
* Office of the Assistant Secretary for Public Affairs (ASPA). 
* Center for Faith-Based and Neighborhood Partnerships (CFBNP); 
* Office for Civil Rights (OCR); 
* Departmental Appeals Board (DAB); 
* Office of the General Counsel (OGC); 
* Office of Global Affairs (OGA)[A]; 
* Office of Inspector General (OIG); 
* Office of Medicare Hearings and Appeals (OMHA); 
* Office of the National Coordinator for Health Information Technology 
(ONC). 

[A] units are part of the Public Health Service. 

Source: GAO analysis of HHS data. 

[End of figure] 

HHS regulations for section 209(f) provide that special consultants 
may only be appointed when the PHS cannot obtain services through 
regular civil service appointments or under the compensation 
provisions of the Classification Act of 1949.[Footnote 10] The 
regulations further provide that rates of compensation for special 
consultants are to be set in accordance with criteria established by 
the Surgeon General. The Surgeon General is part of the Office of the 
Assistant Secretary for Health. HHS has used this authority, for 
example, to appoint doctors and others with expertise in specialty 
fields to initiate or provide assistance in conducting medical 
research and set pay for those individuals at rates above those 
allowed under other federal government pay systems. 

HHS regulations covering section 209(g) provide that fellowships may 
be provided to secure the services of talented scientists for limited 
duration (up to 5 years) for health-related research, studies, and 
investigations.[Footnote 11] The regulations further provide that the 
Secretary may authorize procedures to extend the term of fellowships, 
may authorize stipends for the fellows, and is responsible for 
establishing appointment procedures beyond those set forth in the 
regulations.[Footnote 12] 

Some Title 42 employees earn pay within or exceeding pay levels found 
in the Executive Schedule. The Executive Schedule is a five-level, 
basic pay schedule applicable to the highest-ranking executive 
appointments in the federal government. Executive Schedule pay rates 
range from Executive Level V ($145,700 since 2010) to Executive Level 
I ($199,700 since 2010). 

Only HHS and EPA are authorized to use Title 42 hiring authority. By 
contrast, regular hiring authorities such as those under title 5 of 
the U.S. Code--commonly referred to as Title 5--may be used by any 
federal agency.[Footnote 13] Pursuant to HHS and EPA policy, employees 
at HHS and EPA originally hired under Title 5 or other authorities may 
be converted to Title 42 in some circumstances. Under these policies, 
employees hired under Title 42 are eligible for performance bonuses, 
incentives, and other nonsalary payments made available to federal 
employees compensated under Title 5. 

Title 42 employees most frequently work within one of three operating 
divisions: 

* NIH is the nation's medical research agency and is comprised of the 
Office of the Director and 27 institutes and centers, including the 
National Cancer Institute; National Institute on Aging; National 
Heart, Lung, and Blood Institute; and the National Center for 
Complementary and Alternative Medicine. Each institute and center has 
its own specific research agenda, often focused on a particular 
disease or body system. As the central office at NIH, the Office of 
the Director establishes NIH-specific policy and oversees the 
institutes and centers to ensure they operate in accordance with said 
policy. While most of its budget goes to extramural research personnel 
at more than 3,000 universities and research institutions, NIH also 
has intramural research laboratories on the NIH main campus in 
Bethesda, Maryland. The main campus is also home to the NIH Clinical 
Center, which is the largest hospital in the world totally dedicated 
to clinical research. 

* FDA is responsible for, among other things, protecting the public 
health by assuring the safety, efficacy, and security of human and 
veterinary drugs, biological products, medical devices, the nation's 
food supply, cosmetics, and products that emit radiation. FDA is also 
responsible for regulating tobacco products. 

* CDC conducts activities such as identifying and defining preventable 
health problems and maintaining active surveillance of diseases; 
serving as the PHS lead agency in developing and implementing 
operational programs relating to environmental health problems; and 
operational research aimed at developing and testing effective disease 
prevention, control, and health promotion programs. 

EPA uses section 209(g) as the basis for hiring some scientists within 
ORD, the scientific research arm of EPA. ORD's work at EPA laboratory 
and research centers provide the science and technology to identify 
environmental hazards, assess risks to public health and ecosystems, 
and determine how best to control or prevent pollution. According to 
EPA documents and officials, EPA uses Title 42 to secure the services 
of experienced and talented scientists for renewable appointments 
where, because of the nature of the work and expertise needed, regular 
hiring authorities are impractical. EPA has not made appointments 
using section 209(f). 

HHS Has Increased Its Use of Title 42, but More Reliable Data Could 
Improve HHS's Oversight: 

During 2010, HHS had 6,697 employees who were appointed under sections 
209(f) or (g).[Footnote 14] All but 27 of these employees served at 
NIH, FDA, or CDC, while the remaining employees served in the Office 
of the Secretary or within other operating divisions, as shown in 
figure 2.[Footnote 15] 

Figure 2: Most Title 42, Sections 209(f) and (g) Employees Served at 
NIH, FDA, or CDC, 2010: 

[Refer to PDF for image: pie-chart] 

NIH: 4,879; 
CDC: 929; 
FDA: 862; 
Other: 27. 

Source: GAO analysis of HHS data. 

[End of figure] 

The number of employees appointed under sections 209(f) and (g) 
increased overall at HHS by 25 percent from 2006 through 2010, as 
shown in table 1. Since 2006, the number of Title 42 employees grew by 
15 percent at NIH, by 54 percent at FDA, and by 81 percent at CDC, 
while declining by 48 percent at the Office of the Secretary and all 
other operating divisions. 

Table 1: HHS Operating Divisions Have Increased Their Use of Sections 
209(f) and (g) Appointments, 2006 through 2010: 

Operating division: NIH; 
2006: 4,238; 
2007: 4,389; 
2008: 4,569; 
2009: 4,721; 
2010: 4,879; 
Percent change[A]: 15%. 

Operating division: FDA; 
2006: 559; 
2007: 564; 
2008: 595; 
2009: 816; 
2010: 862; 
Percent change[A]: 54%. 

Operating division: CDC; 
2006: 512; 
2007: 603; 
2008: 708; 
2009: 796; 
2010: 929; 
Percent change[A]: 81%. 

Operating division: Other; 
2006: 52; 
2007: 45; 
2008: 44; 
2009: 38; 
2010: 27; 
Percent change[A]: (48%). 

Operating division: Total; 
2006: 5,361; 
2007: 5,601; 
2008: 5,916; 
2009: 6,371; 
2010: 6,697; 
Percent change[A]: 25%. 

Source: GAO analysis of HHS data. 

[A] Figures in parentheses indicate a decrease. 

[End of table] 

The increased use of Title 42 authority came during a period when HHS 
made recruiting and retaining mission-critical elements of its 
workforce a priority. HHS's 2007-2012 Strategic Plan included 
strategic objectives: (1) recruiting, developing, and retaining a 
competent health care workforce, and (2) strengthening the pool of 
qualified health and behavioral science researchers. HHS officials 
generally attributed the increases in Title 42 employees to the 
agency's response to urgent public health matters and effects of the 
economic downturn on the private sector and academia, which, according 
to officials, made the agency more attractive to prospective or on-
board employees. Specifically, according to HHS: 

* The 15 percent increase from 2006 through 2010 at NIH can be 
attributed, in part, to the effects of the economic downturn on the 
biomedical research labor market. Officials told us that as extramural 
research funding available in the private sector and academia is 
shrinking, NIH is able to use Title 42 to more successfully recruit 
and retain biomedical investigators and clinical specialists. 

* The spike in Title 42 appointments at FDA in 2008 and 2009 is a 
result of the Food and Drug Administration Amendments Act of 2007 and 
the Food Protection Plan, FDA's strategy for protecting the nation's 
food supply.[Footnote 16] Additionally, in 2008 FDA launched its first 
class of Commissioner's Fellows (hired under section 209 (g) for up to 
a two year period) beginning with 50 fellows, another class of 50 in 
2009, and a third class of 45 in 2010.[Footnote 17] 

* At CDC, increased use of Title 42 was attributed to the urgency of 
certain programs such as the overseas Global AIDS Program and those 
under the Office of Public Health Preparedness and Response. For these 
programs, officials told us they needed employees with specialized 
scientific skills or training and experience and would not have been 
able to obtain them without Title 42. 

As discussed later, we were unable to determine which section 
authority--sections 209(f) or (g)--was used more often because HHS 
section authority data was not reliable for this purpose. 

As shown in table 2, NIH relies on Title 42 authority for a greater 
percentage of its total workforce than does FDA and CDC. In 2010, 25 
percent of all NIH employees were Title 42 employees, while 10 percent 
of CDC employees and 6 percent of FDA employees were Title 42. NIH 
relied on Title 42 authority for a substantial portion--44 percent--of 
its total research and clinical practitioner workforce.[Footnote 18] 

Table 2: NIH Relied on Title 42 for a Greater Percentage of Its Total 
Workforce and Research and Clinical Practitioners than FDA and CDC, 
2010: 

Agency: NIH; 
Title 42 employees: 4,879; 
Total operating division workforce: 19,292; 
Title 42 percentage of total operating division workforce: 25%; 
Total researchers and clinical practitioners: 11,040; 
Title 42 percentage of researchers and clinical practitioners: 44%. 

Agency: FDA; 
Title 42 employees: 862; 
Total operating division workforce: 14,617; 
Title 42 percentage of total operating division workforce: 6%; 
Total researchers and clinical practitioners: 10,025; 
Title 42 percentage of researchers and clinical practitioners: 9%. 

Agency: CDC; 
Title 42 employees: 929; 
Total operating division workforce: 9,707; 
Title 42 percentage of total operating division workforce: 10%; 
Total researchers and clinical practitioners: 5,817; 
Title 42 percentage of researchers and clinical practitioners: 16%. 

Source: GAO analysis of HHS and CPDF data. 

[End of table] 

Title 42 Employees Serve in Various Functions: 

Title 42 employees at HHS serve in a variety of functional areas, 
including scientific and medical research support and in senior, 
director-level leadership positions. Base salary ranges for Title 42 
employees varied by operating division and occupation. In 2010, almost 
60 percent of Title 42 employees at NIH served in one of five general 
occupations: staff scientist, research fellow, senior investigator, 
clinical research nurse, and clinical fellow. Table 3 describes some 
of the general responsibilities and duties, educational 
characteristics, and salary data for these occupations at NIH. 

Table 3: Most Common Title 42 Occupations at NIH and Characteristics: 

Occupation (number of Title 42 employees in 2010): Staff Scientist 
(1,103); 
Characteristics: 
* Supports the long-term research of a senior investigator and 
independently designs experiments, but does not have responsibilities 
for initiating new research programs; 
* Usually has a doctoral degree; 
Salary[A]: 
* Base salary range: $82,000-$200,000; 
* Average base salary: $118,000; 
* Median base salary: $114,000. 

Occupation (number of Title 42 employees in 2010): Research Fellow 
(666); 
Characteristics: 
* Scientists obtaining experience in biomedical research while 
providing a service relevant to the NIH's program needs; 
* Has a doctoral degree; 
Salary[A]: 
* Base salary range: $45,000-$112,000; 
* Average base salary: $70,000; 
* Median base salary: $69,000. 

Occupation (number of Title 42 employees in 2010): Senior Investigator 
(521); 
Characteristics: 
* Has been granted tenure.[B] Some senior investigators are assigned 
organizational responsibilities in the institute or center, that is, 
section or branch chief; 
* Has a doctoral degree; 
Salary[A]: 
* Base salary range: $117,000-$350,000; 
* Average base salary: $192,000; 
* Median base salary: $195,000. 

Occupation (number of Title 42 employees in 2010): Clinical Research 
Nurse (347) [C]; 
Characteristics: 
* Specializes in the care of research participants and is responsible 
for assuring participant safety, formulating patient care plans, 
integrity of protocol implementation, accuracy of data collection, and 
recording; 
* Nursing degree or diploma from a professional nursing program; 
Salary[A]: 
* Base salary range: $62,000-$96,000; 
* Average and median base salary: $78,000. 

Occupation (number of Title 42 employees in 2010): Clinical Fellow 
(249); 
Characteristics: 
* Participates in protocol-based clinical research (i.e., research 
with people serving as volunteer participants) as well as laboratory 
research; 
* Has a doctoral-level health degree with interest in biomedical 
research relevant to NIH program needs; 
Salary[A]: 
* Base salary range: $57,000-$137,000; 
* Average base salary: $84,000; 
* Median base salary: $82,000. 

Source: GAO analysis of HHS data and documents. 

[A] Salary figures as of 2010. All figures are rounded to the nearest 
thousand dollars. 

[B] Tenure at NIH differs from tenure at an academic institution. 
Tenure at NIH is defined as the long-term commitment of salary, 
personnel, and research resources needed to conduct an independent 
research program within the scope of the institutes' missions, and 
subject to regular review. Tenure may be conferred on Title 42 
employees despite the nonpermanent nature of the position. 

[C] As part of the sunsetting of the Clinical Research Support pilot, 
NIH is currently phasing out Title 42 appointments for nurses. 

[End of table] 

At FDA and CDC, the most common occupation of Title 42 employees is a 
fellow. In 2010, 340 (39 percent) of FDA's Title 42 employees were 
staff fellows. These positions are for promising research and 
regulatory review scientists. In general, staff fellows at FDA conduct 
or support research, provide technical direction and supervision to 
other researchers, publish scientific articles, and review contract 
and grant proposals designed to support their research projects. Staff 
fellows must have a doctoral degree in bio-medical, behavioral, or 
related science and, according to FDA policy, total compensation may 
not exceed certain pay limits ($155,500 in 2010) unless the Director 
of Human Resources and Management and Services grants an exception. 
FDA staff fellows' base salary range in 2010 is approximately $42,000 
to $224,000, with an average base salary of about $96,000 and a median 
salary of about $92,000. Three of 340 staff fellows at FDA earned more 
than $155,500 in 2010. 

Of CDC's Title 42 employees in 2010, 687 (74 percent) were senior 
service fellows or associate service fellows appointed to study areas 
such as basic and applied research in medical, physical, biological, 
mathematical, social, biometric, epidemiological, behavioral, computer 
sciences, and other fields directly related to the mission of CDC. 
Senior service fellows must have a doctoral degree and associate 
service fellows must have a master's degree. Senior service fellows 
had a base salary range in 2010 of approximately $49,000 to $155,500, 
with an average base salary of about $103,000 and a median salary of 
about $100,000. Associate service fellows had a base salary range of 
approximately $44,000 to $93,000, with an average base salary of about 
$69,000 and a median salary of about $71,000. 

Some Title 42 Employees Are Paid Above Executive Salary Levels: 

The average base salary for all HHS Title 42 employees in 2010 was 
about $116,000 and the median salary was about $101,000. More than one-
fifth of all Title 42 employees at HHS, however, earned a base salary 
above Executive Level IV ($155,500 in 2010). Congress regularly refers 
to executive salary levels in order to express minimum or maximum 
levels of pay authorized for positions in the federal government. For 
example, Congress has imposed a cap of Executive Level IV on salary 
(i.e., basic pay) rates where pay is fixed by administrative action 
under 5 U.S.C. § 5373. In a related effort to this audit, we are 
issuing a legal opinion on whether there are any statutory caps on pay 
for consultants and fellows appointed under 42 U.S.C. §§ 209(f) or 
(g), including whether the cap under section 5373 applies. Table 4 
shows the number of Title 42 employees whose base salary is within or 
above the various Executive Salary Levels in 2010. 

Table 4: HHS Title 42 Employees with Base Salaries within or Exceeding 
Federal Executive Salary Levels, 2010: 

Executive level: At or above Executive Level I ($199,700); 
Number of Title 42 employees[A]: 629. 

Executive level: Within Executive Levels I and II ($179,700-199,699); 
Number of Title 42 employees[A]: 319. 

Executive level: Within Executive Levels II and III ($165,300-179,699); 
Number of Title 42 employees[A]: 295. 

Executive level: Within Executive Levels III and IV ($155,500-165,299); 
Number of Title 42 employees[A]: 218. 

Executive level: Total; 
Number of Title 42 employees[A]: 1,461. 

Source: GAO analysis of HHS data. 

[A] The remaining 5,236 Title 42 employees had salaries below 
Executive Level IV ($155,500). 

[End of table] 

HHS has converted a number of employees from positions under the 
General Schedule or other pay systems to positions under Title 42. Of 
the 1,183 new Title 42 appointees in 2010, 45 of them--or about 4 
percent--were current HHS employees that were converted to Title 42 
positions. Thirty of these conversions occurred at NIH. We also found 
that employees converted to Title 42 from other pay systems generally 
earned higher compensation than in their previous position. Employees 
converted in 2010 earned, on average, $34,000 more in base salary than 
earned in their previous position. However, many did not receive the 
same amount of nonsalary payments (including retention incentives) 
received while employed under the General Schedule or other pay 
system. Therefore, the average increase in total compensation (base 
salary and incentive or other nonsalary payments) was about $14,000 in 
2010. 

Under HHS policy, Title 42 employees are eligible to receive 
performance bonuses; recruitment, retention, and relocation 
incentives; and other nonsalary payments that are available to other 
HHS employees.[Footnote 19] In 2010, HHS issued nonsalary payments to 
6,336 of its 6,697 Title 42 employees.[Footnote 20] Seventy-one 
percent of Title 42 employees earned ratings-based individual cash 
awards. Less than 1 percent (60) of Title 42 employees received 
nonsalary payments in the form of recruitment, retention, or 
relocation incentives.[Footnote 21] 

According to senior officials at HHS's human resource office and NIH, 
Title 42 authority provides two primary benefits--appointment agility 
and compensation flexibility. These officials said appointment agility 
enables the agency to hire scientists, doctors, and other consultants 
to quickly fill knowledge, skill, and ability gaps so that medical 
research can move forward and to respond to medical emergencies. For 
example, according to HHS officials, the agency used Title 42 
authority to quickly hire experts needed to develop a vaccine in 
response to the H1N1 flu pandemic of 2009. Appointment agility is also 
important because many research projects, particularly those at NIH, 
are not meant to be long-term and Title 42 appointments can align with 
project time frames better than hiring full-time permanent staff under 
regular hiring authorities. In some cases, the temporary appointment 
of a researcher with highly-specialized skills to assist with a 
limited-scope, limited-duration study may be more appropriate than a 
permanent position. 

According to officials, compensation flexibility helps HHS compete 
with the private sector and academia to hire and retain highly 
qualified employees with rare and critical skill sets, such as 
neuroscientists, applied researchers in dietary intakes, and engineers 
that can operate particle accelerators. HHS human resource officials 
stated the salaries HHS can offer to its top researchers are often not 
commensurate with private sector salaries. However, they said the 
higher compensation limits under Title 42 combined with other 
benefits--such as name recognition and access to advanced research 
equipment and technology not often available in the private sector or 
academia--can help offset compensation disparities and make HHS 
attractive to researchers, doctors, and scientists. 

HHS Does Not Have Reliable Data on the Use of Its Title 42 Authority: 

Because HHS does not consistently electronically record the authority 
under which many of its Title 42 employees were appointed, the number 
of employees hired under either section 209(f) or (g) could not be 
determined. When an employee is hired under Title 42 authority, HHS 
human resource officials create a personnel record in its central 
personnel transaction system, the Enterprise Human Resources and 
Payroll (EHRP) system. A required field in the personnel record exists 
to select a code from a drop-down menu designating the general 
authority under which the individual was hired, such as Title 42 or 
Title 5 authority. The personnel record also contains an open-ended 
text field to manually enter a specific section authority such as 
sections 209(f) or (g), applicable to Title 42 authority. Our analysis 
of HHS data found thousands of cases where the section authority 
applicable to Title 42 was not recorded in EHRP. We also found that 
when the section authority field was used, there were more than 400 
different types of entries made in the EHRP records. 

According to HHS officials, there are some data elements in the EHRP 
system--including the section authority under Title 42--that are 
unreliable. The majority of the unreliable data elements are those 
from nonrequired data entry fields. Whereas required fields must be 
completed before a personnel action is saved in the system, Title 42 
section authority is a free-form, open-ended field and there is no 
system control in place to ensure the field is recorded or recorded 
accurately prior to saving the personnel action. Our case reviews 
found the section authority for appointment--such as sections 209(f) 
or 209(g)--was always documented on hard copy personnel action forms, 
but in many cases was not recorded in personnel records in the EHRP 
system. 

We have previously reported that effective workforce planning and 
management require that human capital staff and other managers base 
their workforce analyses and decisions on complete and accurate 
personnel data.[Footnote 22] The lack of reliable information in this 
area may preclude HHS, Congress, and other organizations from 
providing effective oversight of the Title 42 program and evaluating 
its effectiveness.[Footnote 23] For example, the lack of section 
authority data in EHRP has made it difficult for HHS to provide 
accurate headcounts of employees hired under sections 209(f) or (g) 
and resulted in HHS overstating the number and operating division of 
its employees hired under these sections to oversight bodies, 
including Congress, and in response to this audit. We identified more 
than 600 instances where HHS erroneously included employees in its 
data submission to us that were not appointed under sections 209(f) or 
(g). Some erroneous cases included individuals we later found were 
hired under appointing authorities other than sections 209(f) or (g), 
including appointing authorities under 42 U.S.C. §§ 247b-8 and 210(g). 
One result of including these cases in error was HHS reported it had 
made appointments under 209(f) or (g) at the Centers for Medicare and 
Medicaid Services, which would be prohibited by law.[Footnote 24] Our 
analysis found these appointments were made under different 
authorities. 

HHS officials acknowledged there were potentially many cases included 
that were not employees hired under sections 209(f) or (g) as it was 
sometimes difficult to discern from available data whether employees 
were hired under sections 209(f) or (g), rather than other authorities 
under Title 42. According to human resource officials, when attempting 
to report on the agency's Title 42 employees, they chose to include 
questionable cases rather than risk an undercount. 

HHS Did Not Consistently Adhere to Sections of Its Title 42 Policy and 
Lacks Guidance for Some Authority Provisions: 

Section 209(f) Hiring and Conversions: 

HHS did not consistently adhere to certain sections of its policy for 
hiring and converting employees under section 209(f). We conducted 28 
case file reviews of appointments made under existing section 209(f) 
policy to determine the extent to which HHS practices were consistent 
with its policy.[Footnote 25] While not generalizable across the 
population of Title 42 employees, the case file reviews indicate that 
HHS appointment practices are consistent with some aspects of its 
section 209(f) policy. For example, all appointees met education 
requirements for the type of scientific position being filled. While 
not an explicit requirement of the policy, HHS consistently documented 
the basis for compensation and any recruitment or retention incentives 
provided to section 209(f) employees. In some cases, however, HHS did 
not consistently adhere to its requirements, as shown in table 5. 

Table 5: HHS Compliance with Certain Sections of Its Policy for Hiring 
and Converting Employees Under Section 209(f) for Cases Reviewed: 

Appointment requirement: Appointments under section 209(f) may only be 
used to fill scientific positions; 
Observations: In 5 of 28 cases, it was unclear or questionable whether 
the individuals were performing scientific duties or needed scientific 
expertise to perform their responsibilities. 

Appointment requirement: Appointments can only be made after other 
available personnel systems--including Title 5, the Senior Biomedical 
Research Service, and PHS Commissioned Corps--have failed to yield 
candidates that possess critical scientific expertise. These 
recruitment and retention efforts shall be documented prior to making 
an appointment under section 209(f); 
Observations: In 23 of 28 cases no documentation was provided to show 
other non-Title 42 recruitment and retention efforts under available 
personnel systems and hiring authorities failed to yield the 
candidates with needed scientific expertise. 

Appointment requirement: Conversions from other pay systems are only 
to be used in exceptional circumstances as outlined in this policy. A 
scientist may only be converted to [209(f)] from another pay system if 
he or she is appropriately peer-reviewed according to operating 
division procedures and determined to meet all of the following 
criteria: 
* Evidence of recognition as a national or international expert in the 
field; 
* Evidence of original scientific or scholarly contributions of major 
significance in the field; 
* Evidence of leadership in the field equivalent to a full-tenured 
professor in academia; 
* Special knowledge and skills of benefit to the agency; 
Observations: HHS conversions met all of the requirements in two of 
six cases we reviewed of individuals converted to Title 42 209(f). In 
two other cases, conversions met some but not all of the criteria and 
in the remaining two cases, documentation was not available to support 
the basis for conversion. 

Appointment requirement: In order to determine qualifications, 
supervisors must prepare a narrative statement fully describing the 
scientific duties and responsibilities and the education and 
experience to perform those duties; 
Observations: HHS consistently prepared narrative statements 
describing the position's duties and responsibilities and the 
education and experience needed to perform those duties. 

Appointment requirement: All appointees must meet positive education 
requirements for the type of scientific position being filled, which 
must include, at a minimum, a bachelor's degree in a scientific 
discipline directly related to the position.[A] In addition, 
appointees must have professional experience and stature that is 
commensurate with the duties of the position being filled; 
Observations: Individuals hired under section 209(f) met or exceeded 
educational requirements and had professional experience related to 
the duties to be performed. 

Source: GAO analysis of HHS documents. 

[A] For some Title 42 occupations, a doctoral degree or nursing degree 
may also be required. 

[End of table] 

In accordance with HHS 2004 Title 42 policy, special consultants may 
only be appointed under section 209(f) to fill scientific positions; 
however, the policy included no formal criteria and did not define 
"scientific." We reviewed the statement of duties for 28 section 
209(f) cases and found in 5 cases that it was unclear the position was 
scientific. For example, special consultants hired under section 
209(f) included an individual providing pastoral care services, 
quality assurance specialists, health scientist administrators, and 
data management and technology administration. In one case, a protocol 
manager's duties and responsibilities appeared to require scientific 
expertise in providing medical protocol services. It is possible that 
these and most other positions noted are scientific in nature or 
require knowledge of particular scientific disciplines, but it was not 
clear from the statement of duties and other supporting documentation 
provided by HHS on what basis these positions were considered 
scientific. 

Additionally, the section 209(f) policy states appointments can only 
be made after other available personnel systems, including Title 5 and 
PHS Commissioned Corps, have failed to yield candidates that possess 
critical scientific expertise. These recruitment and retention 
efforts, according to the policy, are to be documented prior to making 
an appointment under section 209(f). In only 5 of the 28 section 
209(f) case files we reviewed was there documentation showing HHS 
considered other personnel systems before using Title 42. In one case, 
the memorandum requesting approval to hire a 209(f) candidate included 
a template with each of the section 209(f) policy requirements and how 
each requirement was met. In explaining other recruitment efforts, the 
template showed (1) how the position was a top-level scientific 
position and therefore not appropriate for Title 5 or other 
authorities, (2) due consideration was given to the PHS Commissioned 
Corps, and (3) recruitment incentives would be insufficient in light 
of past efforts to recruit individuals with the requisite scientific 
experience. 

The section 209(f) policy also includes guidance for converting 
employees from other pay systems into special consultant positions 
under Title 42. The policy states conversions are only to be used in 
exceptional circumstances and employees may only be converted to the 
Title 42 program if they meet all conversion criteria, such as 
providing leadership in a field equivalent to a full-tenured professor 
in academia and recognition as a national or international expert in 
the field. In our case reviews of six conversions to section 209(f), 
two cases met each of the requirements for converting employees. In 
one case where each of the requirements was documented, NIH officials 
developed a memorandum explaining the need to convert a radiologist 
because radiologists in the particular specialty are rare, several 
with similar skill sets recently left NIH, and the individual will be 
maintaining equipment critical for multiple clinical trial protocols. 

For other case files we reviewed, documentation provided by HHS did 
not support the basis for conversion. In two cases, the stated purpose 
of conversion to Title 42 was to retain a clinical research nurse and 
a medical technologist. While the justifications showed how both cases 
provided special knowledge and skills of benefit to the agency, the 
documents did not provide evidence of recognized national or 
international expertise in their field, leadership equivalent to a 
full-tenured professor, or original scientific or scholarly 
contributions, as required. In the other two cases, we could not 
determine if conversion requirements were met because HHS could not 
provide documentation needed. 

In August 2010, HHS's Office of Human Resources reviewed the agency's 
use of section 209(f) authority and found two issues similar to those 
in our review. The review found that HHS section 209(f) policy did not 
define "scientific," and in the absence of a definition, it appeared 
the operating divisions adopted an interpretation that was most 
accommodating to the appointment. The review also found most 
appointment documentation lacked any information about prior 
recruitment and retention efforts. Recommendations from the audit 
report became the basis for a new 209(f) policy, which was issued in 
February 2012.[Footnote 26] Significant changes to the 209(f) policy 
include: 

* Defines "scientific position" to include positions in which the 
incumbent is directly involved in or manages scientific research or 
activities, and administrative positions that require the incumbent to 
have scientific credentials. 

* Requires that the same recruitment plan be used for both Title 5 and 
Title 42 to demonstrate that other available personnel systems failed 
to yield qualified candidates. Further, the policy also explains the 
process and documentation requirements necessary to demonstrate that 
other available personnel systems, including Title 5, the Senior 
Biomedical Research Service, and PHS Commissioned Corps, have failed 
to yield qualified candidates. 

* Identifies specific positions and/or categories of positions at NIH 
that may be filled through section 209(f) without "exhausting" other 
recruitment mechanisms or authorities. 

Section 209(g): Appointing and Compensating Fellows: 

HHS has no agencywide implementing policy for appointing and 
compensating employees hired as fellows under section 209(g), 
including details about what documents are needed to support the basis 
for appointments and compensation. We have previously reported that 
agencies should have clearly defined, well-documented, transparent, 
and consistently applied criteria for appointing and compensating 
personnel.[Footnote 27] In lieu of guidance from HHS, the individual 
operating divisions established their own policies and guidance for 
appointing and compensating fellows under 209(g), each with different 
levels of detail, compensation limits, and documentation requirements. 
NIH has instructions for appointing fellows as well as guidance for 
the use of recruitment and retention incentives. FDA's Service 
Fellowship Plan provides appointment and compensation setting 
procedures for section 209(g) fellows and caps total compensation at 
Executive Level IV, with some exceptions above that cap available for 
consideration. CDC's policy for its 209(g) Fellowship Program provides 
provisions for all fellows and general compensation guidance. Top pay 
for a fellow is set at the equivalent of the Grade 15, Step 10 pay 
level. 

The lack of an HHS-wide policy poses the risk that compensation 
decisions for section 209(g) fellows at HHS may not be made 
consistently across operating divisions. Although some guidance exists 
at the operating division level for setting compensation targets, in 
11 of the 20 case studies we conducted of section 209(g) fellows, we 
found either no or insufficient documentation to support the basis for 
compensation. Without an agencywide policy, an agency cannot be 
assured that it is allocating its resources most appropriately. 
According to senior human resource officials at HHS, an agencywide 
policy is needed and the agency is developing a policy for appointment 
and compensating fellows under 209(g). However, it is not clear that 
the policy will address important issues such as documenting the basis 
for compensation. The section 209(g) policy was still in development 
as of May 2012. 

EPA Employs a Limited Number of Title 42 Fellows, Primarily in 
Leadership Roles: 

Congress provided EPA with the authority to use 42 U.S.C. § 209 to 
employ up to 30 persons at any one time through fiscal year 2015. EPA 
has appointed 17 fellows in ORD from 2006 to 2011 under section 
209(g). Of the 17 fellows appointed under Title 42, 12 were hired from 
outside EPA, while the remaining 5 converted from other positions 
within EPA.[Footnote 28] Of the 17 appointments, 14 were selected 
through advertised competition. To date, all 17 fellows remain with 
EPA and appointments for the three fellows hired in 2006 have been 
renewed for another 5-year term.[Footnote 29] See figure 3 for the 
cumulative onboard Title 42 staff, by new hire or conversion. 

Figure 3: Cumulative Number of EPA Title 42 Staff, 2006 through 2011: 

[Refer to PDF for image: stacked vertical bar graph] 

Fiscal year: 2006; 
New hires: 3; 
Conversions: 0; 
Total: 3. 

Fiscal year: 2007; 
New hires: 6; 
Conversions: 1; 
Total: 7. 

Fiscal year: 2008; 
New hires: 7; 
Conversions: 3; 
Total: 10. 

Fiscal year: 2009; 
New hires: 7; 
Conversions: 4; 
Total: 11. 

Fiscal year: 2010; 
New hires: 8; 
Conversions: 4; 
Total: 12. 

Fiscal year: 2011; 
New hires: 12; 
Conversions: 5; 
Total: 17. 

Source: GAO analysis of EPA data. 

[End of figure] 

According to EPA officials, the agency has identified mission critical 
personnel needs and is actively recruiting to fill the 13 remaining 
authorized Title 42 positions. The agency has no plans to use 
authority under section 209(f) at this time, but may consider it in 
the future. Officials told us EPA would need to develop guidance for 
implementing section 209(f) before using the authority.[Footnote 30] 

According to agency documents, Title 42 fellows at EPA lead scientific 
research initiatives, are considered experts in the related scientific 
discipline, and some manage or direct a division or office. For 
example: 

* One Title 42 fellow manages and provides oversight for research in 
an integrated systems toxicology research program, was previously an 
Associate Dean at a university where the individual led similar 
research efforts, and leads an ORD division with more than 80 staff. 

* Another leads a research program by developing biological measures 
to assess the impact of environmental exposure on human health and 
serves as Director for the Environmental Public Health Division. 

* The lead scientist for bioinformatics within the National Center for 
Computational Toxicology (NCCT) is a Title 42 fellow, responsible for 
conducting data analysis and developing solutions for data management, 
and serving as senior advisor to the center's director. 

According to EPA officials, Title 42 provides two important tools EPA 
needs to achieve its mission. First, EPA reported that Title 42 
provides the flexibility to be competitive in recruiting top experts 
who are also sought after by other federal agencies, private industry, 
and academia. Prior to using Title 42, EPA had difficulty recruiting 
and retaining scientists in certain highly specialized disciplines 
under regular hiring authorities. We reported in 2001 that EPA faced 
significant challenges in recruiting and maintaining a workforce with 
mission-critical skills in key technical areas such as environmental 
protection, environmental engineering, toxicology, and ecology. 
[Footnote 31] EPA officials told us Title 42 has helped the agency 
recruit individuals in cases where, because of the specialization of 
expertise needed, authority to set pay over the limits of other hiring 
authorities was needed to be competitive in the labor market. As such, 
the minimum base salary for Title 42 employees at EPA is equal to the 
highest base pay level for employees paid under the General Schedule, 
and the maximum base salary is $250,000.[Footnote 32] 

EPA officials also stated Title 42 provides the appointment 
flexibility needed to align experts with specific skills to changing 
scientific priorities. One specific program where EPA cited the 
importance of using Title 42 in that way was in the development of the 
NCCT. There are four Title 42 fellows at NCCT, including its director. 
The fellows assist in the development of NCCT initiatives, such as the 
Computational Toxicology Research Program, a program that is 
developing alternatives to traditional animal testing. A 2010 review 
by the National Academy of Sciences National Research Council reported 
"the use of Title 42 appointments to develop NCCT is an excellent 
example of how such appointments can be used to build new capacity and 
advance the state of science."[Footnote 33] EPA officials stated it is 
not the agency's intention to hire a fellow long-term under Title 42, 
but rather employ the individual as long as a priority remains high. 
For the three fellows hired in 2006, EPA renewed the terms for another 
5-year appointment. 

Annual salaries range from approximately $153,000 to $216,000, with an 
average salary of about $176,000 and a median salary of about 
$171,000. As shown in table 6, 15 of the 17 EPA fellows had salaries 
exceeding Executive Level IV. 

Table 6: Number of EPA Title 42 Fellows with Salaries in Federal 
Executive Salary Levels, 2010: 

Executive level: At or above Executive Level I ($199,700); 
Number of fellows: 3. 

Executive level: Within Executive Levels I and II ($179,700-$199,699); 
Number of fellows: 3. 

Executive level: Within Executive Levels II and III ($165,300-
$179,699); 
Number of fellows: 4. 

Executive level: Within Executive Levels III and IV ($155,500-
$165,299); 
Number of fellows: 5. 

Executive level: Below Executive Level IV ($155,500); 
Number of fellows: 2. 

Source: GAO analysis of EPA data. 

[End of table] 

Of the 12 new hires from outside EPA, 8 earned more in annual pay than 
earned in the position previously held, 3 earned less than in their 
previous position, and 1 appointee's salary did not change. Salary 
changes from previous positions ranged from a decrease of $85,000 to 
an increase of $40,000, not including recruiting incentives. Eight of 
the 12 new hires received recruitment incentives ranging from $10,000 
to $50,000. EPA documents indicate that the recruitment incentives 
were offered to compete with private industry and to aid in career 
transition. All five employees converted from other positions within 
EPA received a salary increase, ranging from $6,000 to $15,000. None 
of the converted employees received incentive payments. 

Converted employees generally assumed additional responsibilities as a 
Title 42 employee. Our case studies included four of the five EPA 
employees who converted to Title 42. Of the four appointees who came 
from within EPA, one was promoted from the lead oil research program 
scientist to the director of the land remediation and pollution 
division, one moved from being an associate director to a division 
director within the same national center, one was promoted from a 
branch chief to a division director, and one remained a director. 

In December 2010, EPA began a pilot of using market salary data to 
estimate salaries of what Title 42 candidates could earn in positions 
outside of government given their education, experience, professional 
standing, and other factors. EPA used the market salary data to inform 
salary negotiations for the five fellows appointed since the 
implementation of the pilot. According to EPA officials, the market 
salary pilot concludes in December 2012 and its effect will be 
analyzed at that time. 

EPA Appointment and Compensation Practices Were Generally Consistent 
with Its Guidance, but EPA Could Improve Resolution of Potential 
Conflicts of Interest: 

In appointing Title 42 fellows, EPA generally followed appointment 
guidance described in its Title 42 Operations Manual. The manual 
provides guidance for managers, supervisors, and human resources 
specialists implementing Title 42. In all 10 case files we reviewed, 
documents provided by EPA show Title 42 practices were generally 
consistent with its guidance and requirements. Table 7 shows some 
selected Title 42 appointment requirements and observations from our 
case reviews. 

Table 7: EPA Appointment and Compensation Practices Were Generally 
Consistent with Guidance: 

Appointment guidance: Fellows appointed under Title 42 will be 
assigned duties in major or significant areas of scientific inquiry in 
support of environmental protection; 
Observations: In all 10 cases, EPA assigned the Title 42 employee to 
leadership positions within ORD's scientific research areas. 

Appointment guidance: For all Title 42 positions, a doctoral-level 
degree from an accredited institution of higher learning is 
required[A]; 
Observations: In all 10 cases, Title 42 employees had doctoral-level 
degrees from accredited institutions of higher learning. Appointees 
have doctorates in areas such as human genetics, soil microbiology, 
chemistry, environmental science, biophysical ecology, synthetic 
organic chemistry, biology, medicine, and anatomy. 

Appointment guidance: Each Title 42 appointee will have a written 
position description which describes principal duties; 
Observations: In all 10 cases, there was a written position 
description describing the background and need for the position, major 
duties and responsibilities, and supervisory controls. 

Appointment guidance: Title 42 positions may be recruited through 
advertised competition, direct-hire without advertised competition, or 
the conversion of a current EPA employee hired under a regular hiring 
authority with or without advertised competition; 
Observations: In 8 of the 10 cases we reviewed, Title 42 positions 
were advertised. In one case, an employee was hired without 
advertisement, but was identified through a previous announcement for 
a different position. One case was a converted employee hired without 
advertised competition. 

Appointment guidance: Title 42 appointees must have conducted 
outstanding research in a field of environmental science or 
engineering that is related to the mission of the ORD; 
Observations: In all 10 cases, EPA provided documentation showing the 
Title 42 employee was actively engaged in peer reviewed original 
research. 

Appointment guidance: Prior to entry on duty, appointees must provide 
a job offer acceptance letter, completed background investigation 
form, completed public financial disclosure report (SF-278), written 
acknowledgment of ethics agreement, and proof of appropriate 
employment visa, if applicable; 
Observations: All new Title 42 employees to the agency provided the 
required documentation. EPA did not conduct new background 
investigations for converted fellows who had a background 
investigation upon original employment with the agency. 

Appointment guidance: The Assistant Administrator of the Office of 
Research and Development (AA-ORD) or designee will approve or 
disapprove recommendations for appointment; 
Observations: The ORD Assistant Administrator's approval was 
documented in all cases. 

Appointment guidance: Title 42 appointments will be made initially for 
a period ranging from 1 year and 1 day to 5 years. Such an appointment 
may be extended for varying periods, not in excess of 5 years for each 
period, and requires approval by the AA-ORD or designee upon a written 
request by the Title 42 appointee's immediate supervisor; 
Observations: EPA appointed all Title 42 employees for a period of 5 
years. 

Source: GAO analysis of EPA documents. 

[A] In response to the National Academy of Sciences National Research 
Council report, EPA has implemented a two-year pilot to waive the 
requirement that all Title 42 employees have a doctoral-level degree. 
The report noted "[t]hat requirement may exclude many highly qualified 
scientist and engineers who do not have such degrees." The report 
continued, "EPA should be flexible, taking such situations into 
account and making exceptions as appropriate." 

[End of table] 

EPA Could Improve Procedures for Resolving Potential Conflicts of 
Interest: 

We conducted 10 case file reviews of EPA Title 42 employees and in 2 
cases we discovered issues related to EPA's procedures for mitigating 
potential financial conflicts of interest.[Footnote 34] EPA's Title 42 
employees are subject to the same laws and regulations that govern the 
ethical conduct of other federal employees. For example, covered Title 
42 employees are required to submit a public financial disclosure 
report (SF-278) as part of the appointment process and annually 
thereafter. Title 42 employees are also covered under the criminal 
conflict of interest law, 18 U.S.C. § 208. Section 208 prohibits a 
federal employee from participating personally and substantially in a 
particular matter in which he or she has a personal financial 
interest.[Footnote 35] The statute is intended to prevent an employee 
from allowing personal interests to affect his or her official actions 
and to protect governmental processes from actual or apparent 
conflicts of interest. The application of the statute can be waived so 
that an employee need not divest his or her financial interest or 
recuse themselves from the particular matter, where the nature and 
size of the financial interest and the nature of the matter in which 
the employee would participate are unlikely to affect an employee's 
official actions.[Footnote 36] 

EPA's Title 42 guidance includes pre-employment ethics clearance 
procedures for identifying and mitigating potential conflicts of 
interest prior to appointment. As part of the procedures, an ethics 
official in EPA's Office of General Counsel (OGC/Ethics) works with 
the candidate to ensure that all required information is reported on 
the disclosure form and to develop an ethics agreement, as necessary, 
to mitigate or resolve any identified potential conflicts. A job offer 
may only be extended after OGC/Ethics signs the public financial 
disclosure report.[Footnote 37] Although EPA has preappointment ethics 
clearance procedures as noted above, it does not have postappointment 
procedures in place to ensure Title 42 employees meet ethics 
requirements to which they have previously agreed. In two cases we 
reviewed, employees had potential conflict of interest situations 
arise after appointment resulting, in part, from the agency's failure 
to ensure Title 42 employees followed agreed upon ethics requirements. 

* In one case, EPA general counsel determined stock owned by the 
candidate could be a potential conflict of interest and directed the 
candidate to either recuse himself from certain duties or divest 
himself of the stock as a condition of employment. The candidate 
agreed to divest of the stock and was subsequently hired. A year 
later, during the routine review of the employee's annual financial 
disclosure form, EPA discovered that the employee still owned the 
stock. The employee was ordered to divest of the stock and this time 
immediately complied. EPA also reviewed the projects for which the 
employee was involved while still owning the stock and determined that 
the employee had not participated in any particular matter which would 
have constituted a conflict of interest. According to EPA, there was 
confusion concerning who, if anyone, was tasked to ensure the 
divestiture occurred. 

* In another case, based on the review of the candidate's public 
financial disclosure form, EPA and the candidate entered into an 
ethics agreement, which documented ethical constraints that would 
apply to the candidate and to caution the candidate about certain 
assets held. The agreement listed entities in which the individual 
held stock and advised that, as required by 18 U.S.C. § 208, the 
individual should not participate in any particular matter that 
affected any of the listed entities unless the individual first 
obtained a written waiver from EPA/OGC or the value of the asset was 
low enough to qualify under a regulatory de minimis exemption. 
[Footnote 38] Despite these efforts, a year later, while responding to 
the employee's request for additional time to file the annual public 
financial disclosure form, EPA discovered that the employee was 
participating in a matter while holding stock in a company (a listed 
entity in the ethics agreement) that EPA/OGC initially believed could 
be affected by this matter. Concluding that the employee's 
participation was a conflict of interest, EPA/OGC directed the 
employee, who had been working on the matter for approximately 3 days, 
to immediately stop working on the matter. The employee immediately 
complied and sold the stock holding in question in order to resume 
working on the matter. OGC/Ethics made no inquiry into the specific 
activities the employee engaged in during those 3 days. Almost 2 years 
later, OGC/Ethics officials now conclude that this company was not 
sufficiently affected by the matter to present a violation of 18 
U.S.C. § 208 in light of facts that subsequently emerged. 

EPA officials acknowledge that beyond these two cases, its efforts to 
identify and mitigate potential conflicts of interest after 
appointment can be improved and have taken steps to improve ethics 
oversight. For example, in order to increase overall awareness of 
ethics responsibilities, EPA reported it provided additional training 
to a senior ethics official and now copies Deputy Ethics Officials - 
officials responsible for assisting employees in being compliant with 
ethics requirements - when cautionary memoranda are issued. EPA also 
told us it has plans to develop mandatory training sessions for ethics 
officials in its field laboratories and centers and implement a 
process where employees hired under the Title 42 and other authorities 
send EPA OGC confirmation of such actions as stock divestitures or 
signed recusals. As details and implementation timelines for these 
plans were not available at the time of our review, it is not clear 
that these plans fully consider and address ethics issues that arise 
after appointment and ensure previously agreed upon ethics 
requirements are followed, as was the issue in the two cases above. 

Conclusions: 

HHS and EPA have used Title 42 to recruit and retain highly skilled, 
in-demand personnel to government service. Although HHS relies on 
Title 42 to fill some of its most critical scientific and medical 
research positions, the lack of complete data and guidance may limit 
the agency's ability to strategically manage the use of the authority. 
HHS erroneously reported appointments made under sections 209(f) and 
(g) that would have been prohibited by law, indicating the agency's 
data management practices may preclude effective oversight of the 
program and workforce planning. Effective oversight is particularly 
important in light of HHS's increasing use of Title 42 and the number 
of employees earning salaries higher than most federal employees. 
Inconsistencies between HHS's policies and practices related to 
section 209(f) may result in that authority being used in ways for 
which it was not intended. Recent changes to 209(f) policy issued by 
HHS should help the agency more consistently follow requirements. As 
appointments have been made under 209(g) without documentation showing 
the basis for compensation, relying on 209(g) guidance issued only at 
the operating division level may not be sufficient to ensure 
appointments and compensation under this authority are appropriate and 
consistent. HHS has acknowledged the need for agencywide 209(g) 
guidance, but has not determined if it will include requiring 
documentation showing the basis for compensation. EPA generally 
followed its Title 42 policies and has incorporated some modifications 
to improve its appointment and compensation practices; however, EPA's 
current ethics guidance does not sufficiently ensure Title 42 
employees meet ethics requirements after appointment. EPA acknowledged 
it could improve its postappointment ethics oversight and reported it 
has plans to ensure that Title 42 employees send OGC confirmation of 
stock divestitures and other ethics requirements. However, at the time 
of our review, EPA had not provided us with implementation plans or 
timeframes. Although its plans appear to be prudent steps for 
addressing the specific issues that arose in the cases we reported, it 
will be important for EPA to implement them as soon as possible to 
mitigate the risk of future potential conflict of interest issues. 

Recommendations for Executive Action: 

To help ensure HHS has the data and guidance necessary to effectively 
oversee and manage its Title 42 authority, we recommend that the 
Secretary of HHS take the following three actions: 

* Ensure section authority--sections 209(f) or (g)--be consistently 
entered in appropriate automated personnel systems, such as making 
section authority a required, drop-down field in its personnel system 
where this information is initially entered. 

* As part of its effort to implement new section 209(f) guidance, 
systematically document how policy requirements were fulfilled when 
hiring or converting 209(f) employees. This could include such items 
as: 

- the basis for which the position is considered scientific, 

- recruitment and retention efforts made under other hiring 
authorities before using Title 42, 

- a conversion's recognition as a national or international expert in 
the field, 

- a conversion's original scientific or scholarly contributions of 
major significance in the field, 

- a conversion's leadership in the field equivalent to a full-tenured 
professor in academia, and: 

- a conversion's special knowledge and skills of benefit to the agency. 

* As part of its ongoing effort to develop agencywide policy for 
appointing and compensating employees hired under section 209(g), 
ensure the policy requires and provides guidance for documenting the 
basis for employee compensation. 

To help improve enforcement of ethics requirements, we recommend the 
Administrator of the EPA direct the Designated Agency Ethics Official: 

* As part of its efforts to improve postappointment ethics oversight, 
develop and document a systematic approach for ensuring Title 42 
employees are compliant with ethics requirements after appointment. 
Implement, as part of this approach, reported plans to require Title 
42 employees to provide proof of compliance with ethics agreements to 
a designated ethics official within a reasonable timeframe after 
appointment. 

Agency Comments and Our Evaluation: 

We provided the Secretary of Health and Human Services and the 
Administrator of the EPA an opportunity to comment on a draft of this 
report. The HHS Assistant Secretary for Legislation and EPA's Acting 
Assistant Administrator for Research and Development provided written 
responses and technical comments, which we incorporated as 
appropriate. The agencies' comments appear in appendix II and III. 

In a June 7, 2012, letter responding to a draft of this report, HHS 
agreed with each of the three recommendations. HHS's ongoing and 
proposed actions noted in the response address our concerns and are 
likely to improve the agency's management and oversight of its Title 
42 authority. 

HHS agreed with our first recommendation to ensure section authority 
is consistently entered in appropriate automated personnel systems. 
Specifically, HHS stated that as it moves forward with the 
implementation of a new enterprise human resources system, it will 
explore the possibility of using a drop-down field to enter Title 42 
section authority. HHS stated that its Office of Human Resources will 
continue to work with the Operating Divisions and Staff Divisions to 
ensure that Title 42 personnel actions are processed in a consistent 
and accurate manner. 

HHS also agreed with our two recommendations addressing Title 42 
policies. HHS stated that, in part due to our findings, it updated its 
section 209(f) policy to address our concern that HHS document how 
policy requirements were fulfilled when hiring or converting section 
209(f) employees. In addition, HHS agreed with our recommendation to 
develop agencywide policy for appointing and compensating employees 
hired under section 209(g) authority. HHS stated that the section 
209(g) policy will be implemented in the near future. 

In a June 6, 2012, letter responding to our draft, EPA disagreed with 
the recommendation directed to EPA and our discussion of the second 
ethics case. Specifically, EPA requested that we update our discussion 
to note that the individual had not yet visited a site related to work 
on the matter. EPA stated that since the individual had not yet 
visited the site, EPA is not aware of any evidence that the employee 
personally and substantially participated in the matter. 

We do not believe a change in the discussion of this ethics matter is 
warranted. GAO made no independent conclusions as to whether the 
individual's participation during the brief period of time we note 
constituted personal and substantial participation in the matter and 
whether this was a conflict of interest in violation of 18 U.S.C. § 
208. Rather, our discussion of this case, including whether the 
individual's participation was a conflict of interest, was based 
exclusively on and attributed to conclusions made by EPA/OGC, both at 
the time of the event and in subsequent interviews conducted for this 
engagement. 

Specifically, documentary evidence at the time of our review supports 
the fact that EPA's concern was the individual's participation in the 
matter in general, and that EPA's concern was not influenced by the 
fact that the individual was not yet on site. As we reported, EPA/OGC 
directed the individual to stop working on the matter when it found he 
owned stock in a company that could be affected by the matter he was 
working on (the individual immediately stopped working on the matter 
and sold the stock in order to resume working on this matter.) 

EPA disagreed with our statement that it is not clear that EPA plans 
to develop an approach to address ethics issues that arise after 
appointment and ensure previously agreed upon ethics requirements are 
followed. In its comments, EPA noted that on February 17, 2012, it 
sent us a letter documenting the steps it has taken and plans to take 
to address postappointment ethics issues and ensure previously agreed 
upon ethics requirements are followed. Specifically in its February 
letter, EPA reported it recently implemented a process in which they 
now copy Deputy Ethics Officials when cautionary memoranda are issued 
to OGE 278 filers. EPA also reports it has plans to implement a 
process for public filers, including employees hired under the Title 
42 special hiring authority, to ensure that they send OGC confirmation 
of stock divestitures, for example, or signed recusals. 

We agree that providing cautionary memoranda to the officials 
responsible for assisting the employee in remaining compliant with 
ethics requirements is a step that could improve EPA's postappointment 
ethics oversight and added this example to the report accordingly. 
However, because EPA did not provide a firm date or timelines for 
implementing its reported plan to ensure employees send OGC 
confirmation of stock divestitures or signed recusals, we did not 
revise the finding. 

EPA disagreed with the recommendation that it develop and document a 
systematic approach for ensuring Title 42 employees are compliant with 
ethics requirements after appointment and consider adding steps to the 
ethics clearance process that require Title 42 employees to provide 
proof of compliance with ethics agreements. EPA asked that we remove 
the recommendation or revise it to acknowledge the plans mentioned 
above and that EPA continues working towards implementation. 

We acknowledge EPA is considering a plan to require proof of 
compliance with ethics agreements and, because we believe this is a 
prudent and needed step for improved ethics oversight, have revised 
the recommendation to reflect EPA's plans. As the two ethics issues we 
reported occurred over two years ago and EPA has acknowledged 
improvements in its postappointment ethics oversight are needed, such 
plans should be implemented as soon as possible. We maintain that the 
recommendation is still necessary to ensure EPA develops detailed 
plans and begins moving toward implementation as soon as possible to 
mitigate the risk of additional potential conflict of interest issues. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to the appropriate congressional committees. We are also sending 
copies to the Secretary of Health and Human Services and the 
Administrator of the Environmental Protection Agency. In addition, the 
report is available at no charge on the GAO website at [hyperlink, 
http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-2757 or goldenoffr@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 key contributions 
to this report are listed in appendix IV. 

Signed by: 

Robert N. Goldenkoff: 
Director, Strategic Issues: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

This report examines the extent to which the Department of Health and 
Human Services (HHS) and the Environmental Protection Agency (EPA) 
have (1) used authority under 42 U.S.C. §§ 209(f) and (g) to appoint 
and set pay for employees since January 2006, and (2) followed 
applicable agency policy, guidance, and internal controls for Title 42 
appointments and compensation. 

To address the first objective, we obtained and analyzed personnel 
data from HHS and EPA to describe Title 42 appointment and 
compensation trends at HHS and EPA since 2006, including the number of 
Title 42 employees; the types of occupations and positions held by 
Title 42 employees; compensation rates, including the number of Title 
42 employees earning more than certain federal salary levels; the 
number of nonsalary payments (e.g., performance bonuses and retention 
incentives) provided to Title 42 employees and their purpose; and the 
number of civil servants that have been converted to Title 42 
appointments and compensation changes associated with those 
conversions. We determined 2006 was the most appropriate beginning 
year for our analysis because, according to HHS human resource 
officials, personnel data prior to 2006 was likely not sufficiently 
reliable for our analysis. Also, EPA began using Title 42 in 2006. HHS 
data presented in this report is 2006 through the end of 2010, the 
last year of complete data available; and at EPA, 2006 through the end 
of 2011. 

We conducted a variety of data tests and interviews with agency 
officials to correct and refine HHS Title 42 data and were able to 
develop a data set that was sufficiently reliable for our purposes. We 
could not, however, report on the number of HHS Title 42 employees 
hired under a particular section authority--sections 209(f) or (g)--
because section authority is not consistently recorded by HHS. For 
EPA, we performed data testing and interviewed agency officials to 
identify any data gaps or inconsistencies with compensation data 
provided and compared EPA data to information found in official agency 
documents. We determined that EPA's data were sufficiently reliable 
for the purposes of our report. 

To assess the extent to which HHS and EPA have followed applicable 
policy, guidance, and internal controls, we reviewed the policies and 
guidance at HHS and EPA in order to understand the conditions under 
which Title 42 appointees are to be recruited, appointed, compensated, 
and managed. We determined case file reviews would be the most 
appropriate approach to obtain the information needed to (1) compare 
practices with policy and guidance, and (2) provide illustrations and 
context for data analysis results. We conducted a total of 63 case 
file reviews out of 1,502 HHS cases within selected strata in two 
phases. In the first phase, we conducted 23 case file reviews to 
address data reliability concerns. The number of case file reviews in 
this phase was proportional to the frequency with which we identified 
and observed cases with data characteristics that deviated from our 
understanding of the purpose and use of sections 209(f) and (g). In 
the second phase, we conducted 40 case file reviews based on a random 
selection of cases that had characteristics related to various areas 
of HHS Title 42 policy and guidance. 

For the HHS case file selection, cases were grouped into strata based 
on certain characteristics--such as hired under section 209(f), hired 
under section 209(g), newly hired in 2010, converted in 2010, or with 
aspects of data inconsistent with our understanding of Title 42's 
purpose--and randomly selected from within those strata. For EPA, we 
selected 10 of the 17 Title 42 employees for case file reviews based 
on a cross section of (1) labs and centers within EPA to understand if 
Title 42 was implemented uniformly across the agency; (2) Title 42 
candidate sources such as the private sector, academia, and 
conversions to determine if differences existed in recruitment and pay 
setting; (3) length of service as a Title 42 employee to understand 
the effect of recent appointment and compensation guidance; and (4) 
compensation characteristics. We developed a data collection 
instrument for both HHS and EPA file reviews to capture information 
that was uniform and comparable. 

At the conclusion of each phase of our case file reviews, we analyzed 
the results and recorded our observations and listed the next steps--
such as interviews with agency officials and further data analysis--
needed to obtain further context for our observations. The results 
from the case file reviews and subsequent activities enabled us to 
understand the results of our data analyses and provided the basis for 
findings. We determined the number of case file reviews was sufficient 
to identify incidences where practices were or were not consistent 
with policies and guidance, but our findings are not generalizable to 
the entire population of sections 209(f) and (g) employees at HHS or 
EPA. 

We conducted this performance audit from May 2011 through July 2012 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. 

[End of section] 

Appendix II: 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: 

June 7, 2012: 

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

Dear Mr. Goldenkoff: 

Attached are comments on the U.S. Government Accountability Office's 
(GAO) report entitled: "Human Capital: HHS and EPA Can Improve 
Practices under Special Hiring Authorities" (GAO-12-692). 

The Department appreciates the opportunity to review this draft 
section of the report prior to publication. 

Sincerely, 

Signed by: 

Jim R. Esquea: 
Assistant Secretary for Legislation: 

Attachment: 

[End of letter] 

General Comments Of The Department Of Health And Human Services (HHS) 
On The Government Accountability Office's (GAO) Draft Report Entitled, 
"Human Capital: HHS and EPA Can Improve Practices Under Special Hiring 
Authorities" (GAO-12-692): 

The Department appreciates the opportunity to respond to GAO's report 
on the use of Title 42 appointment and compensation authorities at HHS 
under 42 U.S.C. § 209 (f) and (g) (together, Title 42). HHS has no 
major disagreement with the facts as represented in the draft report. 
As noted, HHS uses these sections to appoint and compensate key 
scientific personnel, including some of our most senior leadership 
positions. As these sections are the key mechanisms available to 
recruit and retain vital scientific staff for HHS, we agree that the 
GAO recommendations will serve to strengthen the use of the authority. 

The Department's responses to GAO's recommendations are below: 

GAO Recommendation: 

Ensure section authority — 209(f) or (g) — be consistently entered in 
appropriate automated personnel systems, such as making section 
authority a required, drop-down field in its personnel system where 
this information is initially entered. 

HHS Response: 

HHS agrees with this recommendation and recognizes the need to improve 
the accuracy of personnel data for appointments under both 42 U.S.C. § 
209 (f) (42 209(e) and 42 U.S.C. § 209 (g) (42 209(g)) and is 
committed to doing so. In response to our internal review and the 
subsequent GAO engagement, HHS has undertaken and will continue to 
undertake definitive steps to effectively oversee and manage the HHS 
Title 42 authority and ensure consistency in entering section 
authority — 209(f) or (g) — in appropriate automated personnel systems.
Specifically, we have: 

1) Launched a data validation effort to review and correct 
inaccuracies in the current HHS HR database; 

2) Developed, published, and mandated use of the New HR Data 
Processing Guide for HR Specialists and those with HR Data entry 
responsibilities; and; 

3) To ensure greater consistency and oversight at the corporate level, 
moved forward with the implementation of an Enterprise HR IT end-to-
end system scheduled to launch next fall. 

As HHS moves forward with the implementation of this new enterprise-
wide automated human resources system, we will also explore the 
possibility of using a drop down field to enter the Title 42 209(0 and 
(g) appointment information. As the method for documenting the 
appointments is finalized in this new system, the HHS Office of Human 
Resources will continue to work with the Operating and Staff Divisions 
to ensure that Title 42 personnel actions are processed in a 
consistent and accurate manner. 

GAO Recommendation:  

As part of its effort to implement new section 209(f) guidance, 
systematically document how policy requirements were fulfilled when 
hiring or converting 209(f) employees.  

HHS Response:  

HHS agrees with this recommendation. In response to our internal 
review and GAO's findings during this engagement, HHS updated its 
policy regarding the use of 42 U.S.C. § 209(f). The policy, issued 
February 15, 2012, addresses GAO's recommendations. Specifically, it 
includes:  

* A definition of scientific position; 

* A detailed explanation of the process and documentation requirements 
necessary to demonstrate that other available personnel systems, 
including Title 5, failed to yield candidates that possess critical 
scientific expertise; and; 

* States that a scientist may only be converted to a 42 U.S.C. § 
209(f) appointment from another pay system if he/she is appropriately 
peer-reviewed according to the requirements outlined in the 
instruction and OPDIV procedures and is determined to meet all the 
following criteria: 

1. Evidence of recognition as a national or international expert in 
the field, such as: specific experience, invited manuscripts, 
presentations, and consultations; receipt of honors and/or awards; or 
other recognition for noteworthy performance or contributions to the 
field; 

2. Evidence of original scientific or scholarly contributions of major 
significance in the field; 

3. Evidence of leadership in the field; and 

4. Special knowledge and skills of benefit to the agency. 

GAO Recommendation: 

As part of its ongoing effort to develop agency-wide policy for 
appointing and compensating employees hired under 209(g), ensure the 
policy requires and provides guidance for documenting the basis for 
employee compensation. 

HHS Response: 

HHS agrees with this recommendation and will soon implement the 
recommendation. HHS's Title 42 209(g) policy, which will be issued in 
the near future, will require Operating Divisions to establish service 
fellowship plans/programs that prescribe, in writing, the conditions 
under which service fellows are appointed and hold their fellowships. 
This includes, but is not limited to, compensation. 

Specifically, it will state that Operating Divisions are responsible 
for the establishment of service fellowships, or a series of service 
fellowships and shall prescribe, in writing, the conditions under 
which service fellows will be appointed and hold their fellowships. In 
addition, there is a compensation section that requires the following: 

* Salaries for individuals appointed on a full-time schedule will be 
set on a per annum basis commensurate with the applicant's 
qualifications, experience, and other factors as described below. 
Appointments that are on other than a full-time basis will be paid on 
a pro-rata basis of an annualized salary; 

* Base salary will be set at the lowest rate necessary to recruit the 
candidate. In determining the base salary, management must consider 
such factors as: 

- Qualifications and stature of the individual in his/her professional 
field;
- Salary the Fellow may be expected to receive outside the federal 
government for work similar to their fellowship assignment;
- Specialized skills/training, and experience that the applicant may 
possess that will benefit the agency/program; and; 
- Consistency of pay with others in the organization; and; 

* Base salary may not exceed the rate set in accordance with Section 
202 of Pub. L. No. 102-394. 

[End of section] 

Appendix III: Comments from the Environmental Protection Agency: 

United States Environmental Protection Agency: 
Office Of Research and Development: 
Washington, D.C. 20460: 

June 6, 2012: 

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

Dear Mr. Goldenkoff: 

Thank you for the opportunity to review and comment on GAO's draft 
report "Human Capital: HHS and EPA Can Improve Practices Under Special 
Hiring Authorities." Although we received a copy of the entire draft 
report, we want to clarify that the Environmental Protection Agency's 
(EPA) response letter only speaks to the portions pertaining to our 
Agency. 

EPA appreciates GAO's recognition of our efforts to improve our Title 
42 appointment and compensation practices. However, the Agency has 
significant concerns with regard to some of the ethics information 
that has been stated in your draft report. The purpose of this letter 
is to provide EPA's response to both the remaining areas of concern 
while also addressing the recommendation you have provided to EPA in 
your draft report. 

In your draft report, you state (page 35): 

"In two cases we reviewed, employees had potential conflict of 
interest situations arise after appointment resulting, in part, from 
the employee's failure to follow agreed upon requirements." 

EPA respectfully disagrees with this statement; specifically the 
second example included in your draft report (pages 35 — 36). As your 
draft report mentioned, EPA and the candidate entered into an ethics 
agreement which documented ethical constraints that would apply to the 
candidate and cautioned the candidate about certain assets held. We 
would like to clarify that, while responding to the employee's request 
for additional time to file the annual public financial disclosure 
form, EPA discovered that the employee was making arrangements to 
travel to a particular site to work on a new matter. The Ethics Staff 
in EPA's Office of General Counsel (OGC/Ethics) reviewed his last OGE 
278 filing to determine whether any potential conflict of interest for 
the new matter. He held stock in a company (a listed entity in the 
ethics agreement) that OGC/Ethics initially believed could be affected 
by this matter. 

Out of an abundance of caution, OGC/Ethics concluded that the 
employee's stock presented a potential conflict of interest, and 
OGC/Ethics directed the employee to not work on the matter or to 
immediately divest; the latter of which the employee chose to do. It 
is important to note that the individual had not yet visited the site, 
so we are not aware of any evidence that would suggest the employee 
personally and substantially participated in the matter, which under 18
U.S.C. § 208 would be required to qualify as a conflict of interest. 
We ask that your final report be updated accordingly. 

In your draft report, you state (page 36): 

"EPA officials acknowledge that... its efforts to identify and 
mitigate potential conflicts of interest can be improved and have 
taken steps to improve ethics oversight." 

EPA respectfully disagrees with this statement. We believe this 
statement may have resulted from confusion with regard to a statement 
EPA previously provided GAO. Therefore, we would like to clarify that, 
during the pre-appointment process, OGC/Ethics, working through the 
respective Deputy Ethics Official, identifies and conducts a thorough 
review of all possible ethics issues. EPA does agree that during the 
post-appointment process, EPA could provide better oversight to ensure 
that employees follow through in understanding what they need to do to 
be in compliance with the ethics rules. We ask that you update your 
final report to reflect this clarification. 

In your draft report, you state (page 36): 

"It is not clear, however, that EPA plans to develop an approach to 
address ethics issues that arise after appointment and ensure 
previously agreed upon ethics requirements are followed, as was the 
issue in the two cases above." 

EPA respectfully disagrees with this statement. On February 17, 2012, 
we sent a letter to your staff outlining plans EPA has recently 
implemented or will soon implement that will address ethics issues 
that arise after appointment and ensure previously agreed upon ethics 
requirements are followed. As outlined in this letter, OGC/Ethics 
recently implemented a new process in which they now copy Deputy 
Ethics Officials when cautionary memoranda are issued to OGE
278 filers. EPA believes that this is a significant step in addressing 
ethics issues that may arise after appointment. Previously, the filer 
was simply informed of his or her ethical considerations.
Other examples were also mentioned in this letter as it pertains to 
EPA's plans to implement processes that will ensure previously agreed 
upon ethics requirements are followed. Therefore, we ask that you 
update or remove this language as appropriate, including the similar 
statement you have included on the bottom of page 37 of your draft 
report. 

GAO Recommendation #4 (only one addressed to EPA): "As part of its 
efforts to improve ethics oversight, develop and document a systematic 
approach for ensuring Title 42 employees are compliant with ethics 
requirements after appointment. Consider, as part of this approach, 
adding steps to the Title 42 ethics clearance process that require 
Title 42 employees to provide proof of compliance with ethics 
agreements to a designated ethics official within a reasonable 
timeframe after appointment." 

EPA Response: As previously mentioned in this letter, we sent a letter 
to your staff on February 17, 2012 that outlined plans EPA has 
recently implemented or will soon implement that will address ethics 
issues that arise after appointment and ensure previously agreed upon 
ethics requirements are followed. One step that EPA outlined in the 
letter was a plan to implement a process for public filers, including 
employees hired under the Title 42 special hiring authority, to ensure 
that they send OGC confirmation of stock divestitures, for example, or 
signed recusals. We believe that this plan already addresses the 
recommendation that you provided to EPA in your draft report. We ask 
that you remove this recommendation or, at the very least, update the 
recommendation's language to acknowledge the plans mentioned above and 
that we continue working towards implementation. If you choose to 
include a revised recommendation, we ask that you address it to the 
Designated Agency Ethics Official who has the statutory requirement 
for overseeing ethics within the Agency. 

In closing, we want to thank you again for the opportunity to review 
and respond to the draft GAO report. If you have any questions, please 
do not hesitate to contact me. 

Sincerely, 

Signed by: 

Lek Kadel: 
Acting Assistant Administrator for Research and Development: 

Enclosure: 

cc: Scott Fulton, General Counsel, OGC: 
Barbara J. Bennett, Chief Financial Officer, OCFO: 
Craig Hooks, Assistant Administrator, OARM: 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Robert N. Goldenkoff, (202) 512-2757 or goldenkoffr@gao.gov: 

Staff Acknowledgments: 

In addition to the individual named above, Trina Lewis, Assistant 
Director; Shea Bader; Carl Barden; Laurel Beedon; Andrew Ching; Sara 
Daleski; Jeffrey DeMarco; Karin Fangman; Ellen Grady; James Lager; 
Cynthia Saunders; Jeff 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-11-278] (Washington, D.C.: Feb. 2011). 

[2] HHS has other special hiring authorities provided under Title 42 
of the U.S. Code, but this report deals exclusively with the special 
hiring authorities under 42 U.S.C. §§ 209(f) and (g). 

[3] Most federal employees are paid under the General Schedule. The 
highest base pay amount under the General Schedule in 2012 is $155,500. 

[4] The salary and compensation limits were lowered in HHS policy 
issued in February 2012. In March 2007, HHS limited annual base salary 
for employees hired under section 209(f) to $350,000 and $375,000 in 
total compensation. These higher limits were in place during most 
years of our review of HHS's Title 42 use (2006 through 2010). Total 
compensation at HHS includes base pay; recruitment and retention 
incentives; and cash awards, such as performance bonuses. 

[5] According to HHS human resource officials, personnel data prior to 
2006 were likely not reliable for our analysis. EPA began using Title 
42 in 2006. HHS data are available through the end of 2010, the last 
year of complete data available at the time of this study; and at EPA, 
through the end of 2011. 

[6] Pub. L. No. 78-410, § 208(c) and (d), 58 Stat. 682, 686 (July 1, 
1944). These authorities were expansions of employment authorities 
originally provided to the National Cancer Institute in 1937. H. R. 
Rep. No. 1364 (1944). 

[7] Pub. L. No. 109-54, Title II, 119 Stat. 499, 531 (Aug 2, 2005). 
Although the legislation refers only to section 209, the legislative 
history of these grants of authority to EPA provides the intent was to 
grant EPA use of the authorities under sections (f), (g), and (h) of 
section 209. Subsection (h) of section 209 permits noncitizens to be 
appointed and compensated under sections 209(f) and (g). 

[8] Pub. L. No. 111-8, title II, 123 Stat. 524, 729 (Mar. 11, 2009) 
and Pub. L. No. 111-88, Division A, title II, 123 Stat. 2904, 2938 
(Dec. 30, 2009). 

[9] 40 C.F.R. part 18. 

[10] 42 C.F.R. § 22.3. The Classification Act of 1949 established the 
General Schedule, a single, nationwide pay structure for federal white-
collar employees that today consists of 15 grades, each with 10 pay 
steps. 

[11] 42 C.F.R. § 61.32. 

[12] 42 C.F.R. §§ 61.33 and 61.37-38. 

[13] A small number of agency-specific personnel authorities, 
including hiring authorities, are contained in subpart I of part III 
of Title 5. For example, personnel flexibilities relating to the 
Internal Revenue Service are contained in chapter 95 of Title 5. 

[14] All years are in calendar years unless otherwise stated. 

[15] Title 42 employees in the Office of the Secretary served in 
offices within the PHS and Title 42 employees in other operating 
divisions served in operating divisions within the PHS. 

[16] The Food and Drug Administration Amendments Act of 2007, among 
other things, increased FDA's oversight responsibilities for food, 
drug, and medical device safety. Pub. L. No. 110-85, 121 Stat. 823 
(Sept. 27, 2007). 

[17] FDA offers the Commissioner's Fellowship Program for health 
professionals and scientists to receive training and experience at the 
FDA. Fellows are to explore a specific aspect of FDA regulatory 
science including biology, physics, and epidemiology. 

[18] To determine the number of researchers and clinical 
practitioners, we counted the number of operating division employees 
categorized as providing research, development, or clinical practice 
services in the Office of Personnel Management's Central Personnel 
Data File. Researchers are categorized as those who provide 
systematic, critical, intensive investigation directed toward the 
development of new or fuller scientific knowledge of the subject 
studied. Clinical practitioners are those who provide direct clinical 
and related medical services to patients/clients including 
examination, testing, diagnosis, treatment, therapy, casework, 
counseling, disability evaluation, and related patient care services. 
We also included those categorized as in development. Those 
individuals provide systematic application of scientific knowledge 
directed toward the creation of new or substantially improved 
equipment, devices, systems, mathematical models, and others. 

[19] According to HHS, these nonsalary payments are not made under the 
Title 5 authorities providing for such payments, but rather are made 
under the compensation authority of 42 U.S.C. § 209(f) and (g). 

[20] The dollar value of these nonsalary payments were not available 
on an individual basis in the data provided by HHS, and as a result we 
could not determine the range or average amount of the various types 
of nonsalary payments. 

[21] Six of our case studies were Title 42 employees receiving an 
incentive payment, and in all six cases there was a documented basis 
supporting the need for the incentive. 

[22] GAO, Foreign Assistance: Strategic Workforce Planning Can Help 
USAID Address Current and Future Challenges, [hyperlink, 
http://www.gao.gov/products/GAO-03-946] (Washington, D.C.: Aug. 22, 
2003). 

[23] We conducted a variety of data tests and interviews with agency 
officials to correct and refine HHS Title 42 data and were able to 
develop a data set that was reliable for the purposes of this report. 

[24] HHS may only use sections 209(f) and (g) for appointments within 
PHS. According to HHS, the Centers for Medicare and Medicaid Services 
is not an operating division within the PHS. 

[25] HHS Personnel Instruction 42-1 (August 2004). 

[26] HHS Human Resources Manual, Instruction 42-1: Appointment of 42 
U.S.C. § 209(f) Special Consultants (Feb. 15, 2012). 

[27] GAO, A Model of Strategic Human Capital Management, [hyperlink, 
http://www.gao.gov/products/GAO-02-373SP] (Washington, D.C.: Mar. 15, 
2002). 

[28] Of those hired from outside of EPA, 11 were from private industry 
or academia, and one from another federal agency. 

[29] EPA policy provides that at the conclusion of their term, fellows 
with Title 5 permanent competitive status based on prior employment 
retain reinstatement eligibility but have no guarantee of return to a 
Title 5 position. Fellows who do not have Title 5 competitive status 
based on prior employment obtain no reinstatement eligibility due to 
service in a Title 42 position. In this case, if the employee is 
interested in a Title 5 position following the Title 42 appointment, 
they are subject to the normal application and competitive selection 
process. 

[30] In response to a National Academy of Sciences National Research 
Council report in 2000, EPA modeled its Title 42 program after the NIH 
program. NIH had already implemented its program and many structural 
aspects of the program are similar. 

[31] GAO, Human Capital: Implementing an Effective Workforce Strategy 
Would Help EPA to Achieve its Strategic Goals, [hyperlink, 
http://www.gao.gov/products/GAO-01-812] (Washington, D.C.: July 31, 
2001). 

[32] Grade 15, Step 10 of the General Schedule at EPA's research 
facilities where Title 42 employees work include $152,364 at Research 
Triangle Park in North Carolina and $153,542 in Cincinnati, Ohio. 

[33] National Research Council of the National Academy of Sciences, 
The Use of Title 42 Authority at the U.S. Environmental Protection 
Agency: A Letter Report (April 2010). 

[34] We did not conduct a similar review of ethics compliance at HHS 
because, unlike EPA, HHS has not included ethics procedures in its 
guidance specific to appointing and compensating Title 42 employees. 

[35] Section 208 also prohibits an employee from participating in a 
particular matter in which certain persons or organizations, with 
which he or she is affiliated, have a financial interest. 

[36] 5 C.F.R. § 2640.101. 

[37] The signature of the agency ethics official indicates the filer 
is in compliance with applicable laws and regulations. 

[38] Waivers of conflicts of interest are authorized under 18 USC § 
208(b)(1) where an agency determines, in an individual case, that a 
disqualifying financial interest in a particular matter is not so 
substantial as to be deemed likely to affect the integrity of the 
employee's service to the government. 5 C.F.R. § 2640.301. Under the 
regulatory de minimis exemption provision of 18 U.S.C. 208(b)(2), if 
an individual owns less than the designated amounts, the individual 
may participate in the matter. Descriptions of the various exemption 
thresholds for interests in securities are found at 5 C.F.R. § 
2640.202. 

[End of section] 

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