This is the accessible text file for GAO report number GAO-07-289SP 
entitled '2006 Report on GAO's Use of Provisions in the GAO Personnel 
Flexibilities Act of 2000 and the GAO Human Capital Reform Act of 2004' 
which was released on December 14, 2006. 

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Report to the Congress: 

United States Government Accountability Office: 

GAO: 

2006 Report on GAO's Use of Provisions in the GAO Personnel 
Flexibilities Act of 2000 and the GAO Human Capital Reform Act of 2004: 

GAO-07-289SP: 

United States Government Accountability Office: 
Washington, DC 20548: 

Section 6 of the GAO Personnel Flexibilities Act of 2000, Pub. L. No. 
106-303 (2000), and section 11 of the GAO Human Capital Reform Act of 
2004, Pub. L. No. 108-271 (2004), require GAO to report to the Congress 
regarding its use of certain of the provisions of these acts. Our 
report on these provisions is set forth below. 

Public Law 106-303-GAO Personnel Flexibilities Act of 2000: 

Section 6 requires us to report on an annual basis during the 5-year 
period beginning on the date of the enactment of the act all actions 
taken under sections 1 through 3. Because the date of enactment was 
October 13, 2000, this report will be our last under this act and only 
covers 13 days of fiscal year 2006. (October 1 through October 13, 
2005). 

Section 1, regarding voluntary early retirement authority, and section 
2, regarding voluntary separation incentive payments, initially were 
not permanent. However, both sections were made permanent under the GAO 
Human Capital Reform Act of 2004, which incorporated the same reporting 
requirements for these sections. Therefore, we will report on our use 
of these sections below under Pub. L. No. 108-271. 

Section 3 amended our prior reduction in force procedures. We did not 
utilize this provision during the reporting period of October 1 through 
October 13, 2005. 

Public Law 108-271-GAO Human Capital Reform Act of 2004: 

Section 11 requires us to report on an annual basis during the 5-year 
period beginning on the date of the enactment of the act (July 7, 2004) 
on certain activities taken under sections 2, 3, 4, 6, 7, 9, and 10. 

Section 2 made permanent the authority of GAO to provide voluntary 
early retirements and voluntary separation incentive payments. While we 
have used the early retirement authority on several occasions, we have 
chosen not to implement the voluntary separation payments because of 
the costs associated with their use. In addition to voluntary 
separation payments, which can be as much as $25,000, GAO must pay the 
retirement fund an amount equal to 45 percent of the employee's final 
base pay, a cost that has deterred us from using the authority. 
Nevertheless, we believe that this authority could prove useful at some 
point in very limited circumstances. 

During fiscal year 2006, we granted voluntary early retirement to 28 
employees. As in the past, these early retirements helped GAO reshape 
its workforce by providing retirement to mostly high-graded staff. 
Fiscal year 2006 recruitment focused primarily on entry-level positions 
to be filled by employees possessing the skills and knowledge necessary 
to accomplish GAO's work and provided assistance in GAO's efforts to 
reshape its workforce. 

Section 3(a) of the 2004 act established a requirement that an employee 
must be performing at a satisfactory level in order to receive an 
annual pay adjustment. Regulations were issued in January 2005 to 
implement the satisfactory performance requirement for GAO's analysts 
and attorneys and in January 2006 for remaining GAO staff in 
administrative, professional, and support staff (APSS) occupations. All 
employees had been covered by a validated competency-based appraisal 
system for at least one full appraisal cycle when the satisfactory 
performance requirement was first applied. 

In addition, section 3(a) of the 2004 act amended 31 U.S.C. § 732(c), 
which required GAO employees' pay to be adjusted at the same time and 
to the same extent as the pay of employees under the General Schedule. 
It gave the Comptroller General the authority to determine the amount 
of the annual pay adjustment for GAO employees independent of General 
Schedule increases. This authority was effective for any increase on or 
after October 1, 2005. 

For calendar year 2006, the Comptroller General provided an annual 
adjustment of 2.6 percent to those who were performing at a 
satisfactory level and who were paid within applicable competitive 
compensation limits, except for wage-grade employees, and GAO Personnel 
Appeals Board employees who received annual salary adjustments under 
alternative procedures provided by regulation.[Footnote 1] 
Additionally, the Senior Executive Service and Senior Level employees 
received increases pursuant to section 3(b), discussed below. 

In determining the 2.6 percent annual adjustment, GAO considered the 
criteria set forth in section 3(a) of the act, including relevant 
information obtained from GAO's market-based compensation surveys 
conducted by Watson Wyatt, a leading compensation consulting firm. The 
2.6 percent increase was the same as the salary structure adjustment 
factor that the survey relied upon by Watson Wyatt showed had been used 
for the consulting, professional, scientific, and technical service 
industries in 2005. These industries are comparator organizations for 
GAO. The Comptroller General did not determine that extraordinary 
economic conditions or serious budget constraints existed in fiscal 
year 2006. 

Under section 3(b), the Comptroller General is required to consider the 
statutory criteria set out in section 3(a) in determining an annual 
increase for members of the GAO Senior Executive Service and Senior 
Level employees. The Comptroller General considered these criteria and 
determined that each member performing at a satisfactory level would 
receive a 1.9 percent increase, the same increase that was provided to 
the Executive Schedule for calendar year 2006. The Comptroller General 
did not determine that extraordinary economic conditions or serious 
budget constraints existed in fiscal year 2006. 

During fiscal year 2006, 329 employees were covered by the pay 
retention provision under section 4. Two hundred and fifty of these 
employees were above the pay range maximum for Band IIA. The remaining 
employees were above the pay caps for the Analyst Band I or APSS bands. 

Under section 6, certain key employees with less than 3 years' service 
for purposes of leave accrual may be treated as if they had 3 years of 
federal service. Therefore, they would earn 160 hours on an annual 
basis instead of 104 hours. There were 5 employees who received this 
benefit during fiscal year 2006. 

Regarding the Executive Exchange Program provided for in section 7, GAO 
is in the process of actively seeking individuals to participate in the 
program. However, during fiscal year 2006, GAO had no program 
participants from either GAO or the private sector. 

Section 9 relates to GAO's performance management system and, among 
other things, requires a link between the performance management system 
and the agency's strategic plan, adequate training on the 
implementation and operation of the system, and a process for ensuring 
ongoing performance feedback. Even before the imposition of these 
requirements, GAO's performance management system was in conformity 
with the statutory requirements of section 9. GAO, however, continues 
to review and analyze the system and make improvements, when 
appropriate. 

Section 10 requires that before the implementation of any changes under 
the Human Capital Reform Act, the Comptroller General shall consult 
with any interested groups or associations representing officers and 
employees of GAO. The Comptroller General and other relevant agency 
officials meet periodically with the Employee Advisory Council (EAC) to 
discuss current and emerging issues of mutual interest and concern, 
especially those in the human capital area. GAO also uses focus groups, 
employee forums, and other mechanisms to obtain employee input on major 
proposals. In addition, GAO provides all employees with advance copies 
of draft orders concerning proposed policies and regulations for their 
comments prior to publication in final form. These steps were taken in 
regard to the promulgation of all policies and regulations to implement 
the provisions of the Human Capital Reform Act of 2004. We carefully 
considered the input from the comments of EAC members and other GAO 
employees before implementing any changes. 

In regard to human capital management at GAO, sections 2, 3, 4, 6, 7, 
9, and 10 have provided GAO with valuable tools to reshape its 
workforce and acquire and retain the necessary talent to carry out its 
mission, meet its performance goals, and fulfill its strategic plan. 
These sections collectively are a part of the total human capital 
management tools at GAO, which enable GAO to be a world-class 
professional services organization. Without these provisions, GAO would 
have difficulty in competing in the marketplace for employees with the 
appropriate knowledge, skills, and abilities to do its work, a result 
that could have an adverse impact on GAO's ability to fulfill its 
responsibilities to the Congress and the American people. 

FOOTNOTES 

[1] In addition, employees who were rated at meets expectations or 
higher were eligible for performance-based compensation, which included 
a merit increase to base pay or a lump sum performance bonus. 

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