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Report to Congressional Requesters:

May 2003:

HUMAN CAPITAL:

Opportunities to Improve Executive Agencies' Hiring Processes:

GAO-03-450:

GAO Highlights:

Highlights of GAO-03-450, a report to congressional requesters. 

Why GAO Did This Study:

Improving the federal hiring process is critical, as the number of 
new hires is expected to increase substantially. Federal agencies are 
responsible for their hiring processes, but must generally comply with 
applicable Office of Personnel Management (OPM) rules and regulations.

Congressional requesters asked GAO to identify federal hiring 
obstacles, provide examples of innovative hiring practices, and 
identify opportunities for improvement. To address these issues, GAO 
interviewed the human resources directors in 24 largest departments 
and agencies, analyzed the hiring practices of five federal executive 
branch agencies, and reviewed OPM’s role in the hiring process. 

What GAO Found:

There is widespread recognition that the current federal hiring 
process all too often does not meet the needs of agencies in achieving 
their missions, managers in filling positions with the right talent, 
and applicants for a timely, efficient, transparent, and merit-based 
process. Numerous studies over the past decade have noted problems 
with the federal hiring process. Nearly all of the federal human 
resource directors from the 24 largest federal agencies told us that 
it takes too long to hire quality employees. According to data 
compiled by OPM, the estimated time to fill a competitive service 
position was typically more than 3 months, with some human resources 
directors citing examples of hiring delays exceeding 6 months. The 
competitive hiring process is hampered by inefficient or ineffective 
practices, including defining a vacant job and pay that is bound by 
narrow federal classification standards, unclear job announcements, 
the quality of certain applicant assessment tools, time-consuming 
panels to evaluate applicants, and the “rule of three” that limits 
selecting managers choice of candidates. Equally important, agencies 
need to develop their hiring systems using a strategic and results-
oriented approach.

GAO studied five agencies that human capital experts identified as 
having taken steps to improve parts of the hiring process—the U.S. 
Geological Survey, the Department of the Army, the U.S. Census Bureau, 
and the Department of Agriculture’s Agricultural Research Service and 
Forest Service. Some of these practices might help agencies across 
government improve their hiring processes. 

OPM recognizes that the federal hiring process needs reform and has a 
major initiative to study the federal hiring process. OPM’s efforts 
will be most effective to the extent to which they help transform 
agency hiring practices from process focused to mission-focused hiring 
tools that are more closely integrated into agencies strategic plans.

What GAO Recommends:

As a part of its ongoing efforts to improve federal human capital 
management, OPM needs to reform the classification process, assist 
agencies in automating their hiring processes, develop and help 
agencies develop improved hiring assessment tools; and review the 
effectiveness of selected hiring authorities.
 
OPM and the agencies we studied provided comments on a draft of this 
report. OPM generally agreed with the conclusions and recommendations. 
The report was revised to reflect the agency comments.

www.gao.gov/cgi-bin/getrpt?GAO-03-450.

To view the full report, including the scope and methodology, click on 
the link above. For more information, contact J. Christopher Mihm at 
(202) 512-6806 or mihmj@gao.gov.

[End of section]

Letter:

Results in Brief:

Background:

Federal Hiring Is a Lengthy, Cumbersome Process:

OPM's Role and Performance in the Federal Hiring Process:

Conclusions:

Recommendations for Executive Action:

Agency Comments and Our Evaluation:

Appendixes:

Appendix I: Federal Hiring Using the Competitive Service or the 
Excepted Service: 

Appendix II: Description of Category Rating Project Carried Out by the
Agricultural Research Service and the Forest Service:

Appendix III: Objectives, Scope, and Methodology:

Appendix IV: Comments from the Office of Personnel Management:

Appendix V: Comments from the Department of Defense:

Appendix VI: GAO Contacts and Staff Acknowledgments:

Tables:

Table 1: Hiring Problems and Actions Under Way:

Table 2: Fiscal Year 2002 New Hires by Department:

Table 3: Survey Responses from 24 HR Directors:

Figures: 

Figure 1: Total New Federal Hires from Fiscal Years 1990 through 2002: 

Figure 2: Typical Steps for Filling Vacancies through the Competitive 
Examining Process:

Abbreviations:

ACWA: Administrative Careers with America:

ARS: Agricultural Research Service:

DOD: Department of Defense:

FS: Forest Service:

HR: human resources:

MSPB: Merit Systems Protection Board:

NAPA: National Academy of Public Administration:

OPM: Office of Personnel Management:

PACE: Professional and Administrative Career Exam:

SES: Senior Executive Service:

USGS: U.S. Geological Survey:

:

Letter May 30, 2003:

Congressional Requesters:

A high performance organization needs a dynamic, results-oriented 
workforce with the requisite talents, multidisciplinary knowledge, and 
up-to-date skills to ensure that it is equipped to accomplish its 
mission and achieve its goals. To acquire such a workforce and replace 
the huge cohort of federal employees eligible for retirement within the 
next 5-10 years demands that agencies have effective hiring processes 
so that they can compete for talented people in a highly competitive 
job market. Governmentwide, the number of federal new hires was about 
50,000 a year in the mid-1990s, when many agencies were downsizing, but 
totaled more than 143,000 in fiscal year 2002.[Footnote 1] The annual 
number of new hires could easily increase to more than 150,000 as 
agencies take actions to address the security needs arising from the 
terrorist attacks of September 11, 2001, and to fill vacancies created 
by the large number of employees expected to retire over the next few 
years. The fiscal year 2003 budget called for an additional 27,000 
full-time equivalent civilian positions in the Executive Branch over 
fiscal year 2002.

Since 1996, the Office of Personnel Management (OPM) has delegated to 
federal executive branch agencies the authority to perform almost all 
hiring-related tasks; individual federal agencies control the way 
virtually all new hires are brought into their organizations.[Footnote 
2] Generally, people are hired into competitive service positions, 
excepted service positions, or the Senior Executive Service. As shown 
in figure 1, the majority of federal hiring is for competitive service 
positions, and most are filled through the competitive examination 
process, which is governed by statutes and OPM regulations. In fiscal 
year 2001, about 72 percent (75,000 of the 104,000) of jobs that were 
filled were staffed using competitive service hiring authorities. In 
fiscal year 2002, with the increased excepted service hiring of the 
Transportation Security Administration, the percentage of competitive 
service hires dropped to 52 percent (74,000 of 143,000).

Figure 1: Total New Federal Hires from Fiscal Years 1990 through 2002:

[See PDF for image] 

Note: Data are for new permanent full-and part-time hires based on 
information from OPM.

[End of figure] 

While recognizing the need for flexibility in hiring employees, the 
federal government seeks to ensure that appointments comply with the 
cornerstone of federal hiring--the merit principles. The examination 
process is one of the processes intended to ensure that merit 
principles are complied with and includes notifying the public that the 
government will accept applications for employment and assessing 
applicants' relative competencies or knowledge, skills, and abilities 
against job-related criteria to identify the most qualified candidates. 
The applicants for competitive service positions must generally compete 
against each other through the competitive examination process.

In response to your requests,[Footnote 3] the objectives of this report 
are to:

* identify major factors that hamper or delay the federal hiring 
process;

* provide examples of innovative practices used by our selected 
agencies to improve their hiring processes; and:

* identify opportunities for OPM, agencies, and others to improve the 
federal hiring process.

To address these issues, we interviewed and surveyed the human 
resources (HR) directors in the federal government's 24 largest 
departments and agencies. In addition to reviewing our own previous 
work, we reviewed several studies of federal hiring by OPM, the Merit 
Systems Protection Board (MSPB), the National Academy of Public 
Administration (NAPA), and others. In addition, we further analyzed the 
hiring practices of five executive branch agencies that had taken steps 
to improve their hiring processes: the Department of Agriculture's 
Agricultural Research Service (ARS) and Forest Service (FS), the 
Department of the Army (Army), the U.S. Census Bureau (Census), and U.S 
Geological Survey (USGS).[Footnote 4] We also reviewed OPM's role in 
the hiring process and collected and analyzed data from OPM's Central 
Personnel Data File on the use of various hiring authorities. (See app. 
III for details on our scope and methodology.):

Results in Brief:

There is widespread recognition that the current federal hiring process 
all too often does not meet the needs of agencies in achieving their 
missions, managers in filling positions with the right talent, and 
applicants for a timely, efficient, transparent, and merit-based 
process. Numerous studies over the past decade by OPM, MSPB, NAPA, the 
Partnership for Public Service, the National Commission on the Public 
Service, and GAO have noted problems with the federal hiring process. 
Nearly all of the federal HR directors from the 24 major federal 
departments and agencies reported that it takes too long to hire 
quality employees. Specifically, 21 of these HR directors said that the 
time-to-hire was a moderate to great problem. According to data 
compiled by OPM, the estimated time to typically fill a competitive 
service position was more than 3 months with some HR directors citing 
examples of hiring delays exceeding 6 months.

OPM and others have recognized that nearly all parts of the lengthy 
competitive hiring process are cumbersome and ineffective. Agencies 
have the primary responsibility for streamlining and automating their 
hiring processes, but OPM also plays an important role in providing 
leadership and oversight of the merit-based employment system and 
helping agencies meet their hiring challenges. Both the agencies we 
studied and OPM have recognized that the hiring system needs 
improvement and have taken a number of actions. Table 1 below 
summarizes the key problems with the federal hiring process that we, 
OPM, and others have identified, and what actions are being taken to 
address them.

Table 1: Hiring Problems and Actions Under Way:

The problem: Defining a job and determining the appropriate pay is 
complicated by the classification processes and standards, which are 
outdated and not applicable to the jobs and work of today; Actions 
under way: OPM has revised the classification standards for several job 
series, including health care professions and law enforcement, to make 
them clearer and more relevant to current job duties and 
responsibilities. OPM points out that this is only a partial solution 
noting that the classification standards and process need to be 
reformed.

The problem: Unclear, unfriendly job announcements cause confusion, 
delay hiring, and serve as poor recruiting tools; Actions under way: 
OPM has initiated an interagency project to modernize federal job 
vacancy announcements, including providing guidance to agencies to 
enhance announcements. OPM is seeking contractor support for its 
USAJOBS Web site to make it easier and quicker for people to find 
federal jobs and to enhance the site's "eye-catching" appeal.

The problem: A key assessment tool for evaluating applicants for 
Luevano Consent Decree[A] positions and related hiring programs is 
ineffective; Actions under way: OPM's strategic plan states that by 
fiscal year 2005 governmentwide hiring selections are to be based on 
improved assessment tools.

The problem: Manual processes, including the convening of panels and 
the manual rating and ranking of applicants to determine best-qualified 
applicants, are time consuming; Actions under way: Automating the 
hiring process can improve hiring timeliness and efficiency. USGS 
automated its hiring function resulting in a reduction of processing 
time, a reduction of 1,800 staff days of work, and an exponential 
increase in the number of applicants. Census also developed an 
automated hiring system for three critical occupations. In addition, 
OPM has developed an automated staffing system, USA Staffing, which can 
be purchased by federal agencies.

The problem: Numerical rating and ranking and the "rule of three" [B] 
limit the choice of applicants; Actions under way: Congress passed the 
Homeland Security Act of 2002 that authorized agencies to use category 
rating in lieu of numerical rating and adherence to the "rule of 
three." Category rating was determined to be effective in a 
demonstration project conducted by the ARS and FS. OPM is currently 
drafting guidance implementing this new flexibility.

Source: GAO.

[A] The Luevano consent decree is a 1981 agreement that settled a 
lawsuit alleging that a written test, Professional and Administrative 
Careers Examination (PACE), had an adverse impact on African Americans 
and Hispanics. See Luevano v. Campbell, 93 F.R.D. 68 (D.D.C. 1981). The 
consent decree called for the elimination of PACE and required 
replacing it with alternative examinations. Eventually, OPM developed 
the Administrative Careers with America examination. The consent decree 
also established two special hiring programs, Outstanding Scholar and 
Bilingual/Bicultural, for limited use in filling former PACE positions.

[B] 5 U.S.C. § 3318(a) requires the selecting official to select from 
among the top three ranked candidates available for appointment--this 
is the rule of three.

[End of table]

The importance of OPM's success in its hiring initiatives is 
underscored by the results to our survey in October 2002, where HR 
directors had mixed views on whether OPM helped or hindered their 
agencies' hiring processes. A little less than half thought that OPM 
helped the hiring process. Many thought that OPM neither helped nor 
hindered the process and a few thought OPM hindered their hiring 
efforts. HR directors said that OPM needed to be a more active resource 
and enhance its role as a "clearinghouse" of information while 
providing more guidance and better expertise to agencies. This included 
assisting agencies in evaluating their internal hiring processes as 
well as completing more comprehensive evaluations of governmentwide 
hiring. As a part of this process, some agencies explained that OPM 
needed to provide information and "best practices" associated with 
automating the hiring process. They said it is also important that OPM 
address key hiring obstacles, including job classification, job 
announcements, manually rating candidates, and assessment tools, 
especially those tools associated with hiring for the more than 100 
entry-level occupations covered by the Luevano Consent Decree.

More specifically, OPM's efforts will be most effective to the extent 
to which they help transform agency hiring practices from process 
focused to mission-focused hiring tools that are more closely 
integrated into agencies' strategic plans. Accordingly, as a part of 
its overall hiring initiative, we recommend that OPM:

* study how to improve, streamline, and reform the classification 
process;

* continue to assist agencies in making job announcements and Web 
postings more user friendly and effective;

* assist agencies in automating their hiring processes;

* develop and help agencies develop improved hiring assessment tools; 
and:

* review the effectiveness of the Outstanding Scholar and Bilingual/
Bicultural Luevano Consent Decree hiring authorities.

OPM and the Department of Defense (DOD) provided written comments on a 
draft of this report, which are reprinted in appendices IV and V. USGS, 
Census, FS, and ARS provided technical comments that have been 
incorporated into the report.

OPM generally agreed with the conclusions and recommendations in the 
report. However, OPM expressed several concerns with our methodology. 
It believed the section on the classification and position description 
process could be misleading because the majority of jobs are filled 
without this step. We agree, but note that the more important problem 
with the classification process is that inaccurate position 
descriptions and related pay determinations that result from the job 
classification could hamper efforts to fill the positions with the 
right employees. OPM also believed that our draft missed an opportunity 
to hold agencies more accountable for their hiring processes. 
Throughout the draft, we note that agencies are primarily responsible 
for their hiring processes and provide concrete examples of what some 
agencies have done to improve their processes. OPM also provided 
several examples of actions it is taking to improve the hiring process. 
Finally, OPM questioned our methodology of meeting with agency HR 
directors to assess how well OPM is assisting agencies in improving 
their hiring processes. It believes that chief operating officers would 
provide a better perspective of agency recruiting and retention issues. 
While we agree these officials could provide some added overall 
perspective about the results of the hiring process, agency HR 
directors better understand and are responsible for their agencies' 
hiring processes.

DOD noted several areas where it believed that OPM needed to do much 
more to address governmentwide hiring problems. We agree that OPM 
should do more to improve governmentwide hiring and include several 
recommendations to OPM.

Background:

The cornerstone of federal hiring is its merit basis. Congress has 
retained the principle of appointment by merit throughout its various 
amendments and compilations of civil service laws. In enacting the 
Civil Service Reform Act of 1978, Congress reiterated the importance of 
merit in hiring by including a merit principle, which requires that 
"[r]ecruitment should be from qualified individuals from appropriate 
sources in an endeavor to achieve a work force from all segments of 
society, and selection and advancement should be determined solely on 
the basis of relative ability, knowledge, and skills, after fair and 
open competition which assures that all receive equal opportunity." 
[Footnote 5] OPM is responsible for ensuring that the personnel 
management functions it delegates to agencies are conducted in 
accordance with merit principles and the standards it has established 
for conducting those functions.[Footnote 6] In January 1996, OPM 
delegated examining authority, acting under the authority of Public Law 
104-52, to federal agencies for virtually all positions in the 
competitive service. The delegated examining authority requires 
agencies to conduct competitive examinations that comply with merit 
system principles, other personnel-related laws, and regulations as set 
forth in OPM's Delegated Examining Operations Handbook.

Even though the majority of the civilian workforce obtained positions 
through the open competitive service examination process,[Footnote 7] 
certain positions are in the excepted service and are excepted from the 
competitive examination process.

The competitive hiring process, which is described in more detail in 
appendix I, is shown in figure 2.

Figure 2: Typical Steps for Filling Vacancies through the Competitive 
Examining Process:

[See PDF for image] 

[End of figure] 

The number of new hires increased substantially since the mid-1990s--
increasing from about 50,000 employees in 1996 to over 143,000 
employees in 2002. Hiring in the mid-1990s declined because many 
agencies were downsizing and did not need to fill positions. With the 
slowdown in downsizing and the increasing numbers of personnel 
retiring, agencies are increasingly hiring new employees. Prior to 
fiscal year 2002, about one-third of all hires were hired by DOD. In 
2002, the largest federal hirer was the Department of Transportation, 
primarily the Transportation Security Administration.[Footnote 8] 
Table 2 shows total new hires by department in fiscal year 2002.

Table 2: Fiscal Year 2002 New Hires by Department:

Agency: Department of Transportation; Competitive service: 1,041; 
Excepted service: 42,872; Total: 43,913.

Agency: DOD; Competitive service: 24,969; Excepted service: 12,372; 
Total: 37,341.

Agency: Department of the Treasury; Competitive service: 16,924; 
Excepted service: 943; Total: 17,867.

Agency: Department of Veterans Affairs; Competitive service: 6,399; 
Excepted service: 3,994; Total: 10,393.

Agency: Department of Justice; Competitive service: 6,956; Excepted 
service: 1,122; Total: 8,078.

Agency: Department of Agriculture; Competitive service: 4,327; Excepted 
service: 1,161; Total: 5,488.

Agency: Department of Health and Human Services; Competitive service: 
3,072; Excepted service: 925; Total: 3,997.

Agency: Department of the Interior; Competitive service: 2,184; 
Excepted service: 953; Total: 3,137.

Agency: Social Security Administration; Competitive service: 1,572; 
Excepted service: 1,485; Total: 3,057.

Agency: Department of Commerce; Competitive service: 2,032; Excepted 
service: 526; Total: 2,558.

Agency: All others; Competitive service: 4,753; Excepted service: 
2,550; Total: 7,303.

Agency: Total; Competitive service: 74,229; Excepted service: 68,903; 
Total: 143,132.

Source: OPM Central Personnel Data File.

[End of table]

The federal government's hiring is expected to continue to increase. In 
2003, the President's budget called for approximately 27,000 additional 
full-time equivalent federal civilian workers in the executive branch. 
This follows a 36,000 increase in full time equivalent positions in 
fiscal year 2002.

Federal Hiring Is a Lengthy, Cumbersome Process:

It is widely recognized both within government and the private sector 
that the federal hiring process is lengthy and cumbersome and hampers 
agencies' ability to hire the people they need to achieve their agency 
goals and missions. Numerous studies over the past decade by OPM, MSPB, 
NAPA, the Partnership for Public Service, the National Commission on 
the Public Service, and GAO have noted problems with the federal hiring 
process. Our October 2002 survey of HR directors at 24 major 
departments and agencies indicated that 21 of 24 said that the time 
needed to fill positions in their agencies was a moderate to very great 
problem. Moreover, directors at 13 of those agencies reported that the 
time to hire was a great to very great problem. Our October 2001 survey 
showed that 22 directors reported that time to hire was a moderate to 
great problem. Nearly all (22 of 24) of the HR directors we met with 
said the lengthy and cumbersome hiring process is a major factor that 
affects or increases the time needed to fill positions.

HR directors cited problems with the lengthy hiring process. For 
example, an HR director of a major federal department noted that 
thousands of applicants had responded to nationwide openings for a 
critical occupation at a number of locations. However, because it took 
so long to manually process the applications, only 1 in 20 of the 
applicants were still interested in the job when notified that they had 
been selected. Another HR director noted that many managers, 
supervisors, and job applicants do not understand the rules and 
procedures governing federal employment. She said that because of the 
lack of expertise and complicated process, the agency often loses out 
in competition with the private sector because of its inability to make 
timely job offers. Another HR director told us that a significant 
factor that hampers hiring is the paperwork-intensive hiring process 
that continues from application, rating and ranking of applicants and 
production of best qualified lists, through to the "17 forms" that a 
new hire must complete before being brought onboard.

Although, as noted above, nearly all HR directors and others note that 
the time to hire is too long for most federal hires. Comprehensive 
department or governmentwide data are not available; however, in fiscal 
year 2002, OPM compiled and analyzed data on time-to-hire and found 
that it typically took 102 days for agencies to fill a vacancy using 
the competitive process. OPM defined the time to hire time frame as the 
time between when the request to hire or fill a position was received 
in the HR office to the appointment of an applicant to the position. 
Additional time might be needed for a manager to obtain approval for 
the requested hiring action at the beginning of the process or for the 
new employee to receive a security clearance at the end of the process.

Other organizations have noted problems with the lengthy cumbersome 
federal hiring process.

* In July 2002, NAPA reported that federal "hiring remains a slow and 
tedious process." The report noted that "Many managers are attempting 
to rebuild a pipeline of entry level employees in this very competitive 
labor market, yet current hiring methods do not keep pace with the 
private sector."[Footnote 9]

* In September 2002, MSPB said that the federal hiring process has a 
number of key problems including "overly complex and ineffective hiring 
authorities" and "inadequate, time-consuming assessment 
procedures."[Footnote 10]

* In November 2002, OPM in its strategic plan for 2002 through 2007 
stated, " There is a general perception that our hiring process takes 
too long and may not provide well-qualified candidates."[Footnote 11]

* In January 2003, the National Commission on the Public Service said, 
"Recruitment to federal jobs is heavily burdened by ancient and 
illogical procedures that vastly complicate the application process and 
limit the hiring flexibility of individual managers."[Footnote 12]

Not only does the current hiring process not serve agencies and 
managers well as they seek to obtain the right people with the right 
skills, but applicants can be dissuaded from public service by the 
complex and lengthy process. According to a poll commissioned by the 
Partnership for Public Service, "many people view the process of 
seeking federal employment as a daunting one. Three-quarters of non-
federal workers say making the application process quicker and simpler 
would be an effective way of attracting talented workers to 
government."[Footnote 13]

As many of these and other studies have noted, and as many HR directors 
noted in our interviews, nearly all parts of the competitive hiring 
process hamper effective and efficient federal hiring. Key problem 
areas include the following.

* Outdated and cumbersome procedures to define a job and set the pay 
are not applicable to the jobs and work of today.

* Unclear, unfriendly job announcements cause confusion, delay hiring, 
and serve as poor recruiting tools.

* A key assessment tool and hiring programs used for several entry-
level positions are ineffective.

* Convening panels and the manual rating and ranking of applicants to 
determine best-qualified applicants is time-consuming.

* Numerical rating and ranking and the "rule of three" limit the choice 
of applicants and are viewed as ineffective.[Footnote 14]

OPM and the agencies we studied have taken steps to address some of 
these hiring obstacles. Specifically, five agencies we examined--USGS, 
Army, Census, ARS, and FS--took systematic and comprehensive approaches 
that helped to transform their process-oriented hiring systems to ones 
that are focused on meeting their agencies' goals and missions. The 
USGS approach was to focus on automating its hiring process for all of 
its occupations, except research Senior Executive Service positions, in 
order to reduce hiring time, increase the number of applicants, and 
better serve its internal and external customers. Army's approach was a 
data-driven approach--Army developed automated tools to identify 
weaknesses in its hiring process and identified an approach to overcome 
them, including automation. Census's approach, in reaction to the need 
to quickly hire 500 specialists for the 2000 Census, was to work with 
OPM to jointly develop an automated hiring system for three mission-
critical occupations and later to work toward integrating hiring for 
all its occupations into its parent organization's automated hiring 
system. And, as discussed later, OPM also identified hiring 
improvements as a critical goal in its strategic plan and has a multi-
faceted hiring initiative under way. ARS and FS implemented a pilot 
project that demonstrated a more effective way to rate and rank 
candidates for positions.

The following sections describe each of these problems in more detail 
and discuss some specific actions under way by agencies and OPM to 
begin to address the problem.

Process of Defining the Job and Determining Pay Is Complex and 
Antiquated:

The Problem:

The process of defining a job and determining pay is complex and 
antiquated, according to HR directors and experts. Defining the job and 
setting pay must be based on federal job classification standards, 
which are set forth in the Classification Act of 1949.[Footnote 15] The 
classification process and standard job classifications were generally 
developed decades ago when typical jobs were more narrowly defined and 
in many cases, were clerical or administrative. However, today's 
knowledge-based organizations' jobs require a much broader array of 
tasks that may cross over the narrow and rigid boundaries of job 
classifications. The federal job classification process not only delays 
the hiring process, but more important, the resulting job 
classifications and related pay might not match the actual duties of 
the job. This mismatch can hamper efforts to fill the positions with 
the right employees.

Once management decides to fill a vacant position, or create a new 
position, the HR office is called upon to see if a position description 
exists. If a position description does not exist or is not accurate for 
the vacant position, a position description must be completed. Such a 
description documents the major duties, responsibilities, and 
organizational relationships of a job and includes, among others, the 
knowledge required for the position, supervisory controls, complexity 
and nature of the assignment, and the scope and effect of the work.

Once the job description is complete, the job is classified by matching 
the duties and responsibilities to the General Schedule requirements. 
The Classification Act of 1949 provides a plan for classifying 
positions and sets out 15 grade levels. The law expresses these grade 
levels in terms of the difficulty and level of responsibility for a 
specific position. OPM develops standards that must be consistent with 
the principles in the Classification Act of 1949. The classification 
system categorizes jobs or positions according to the kind of work 
done, the level of difficulty and responsibility, and the 
qualifications required for the position, and serves as a building 
block to determine the pay for the position. Today's knowledge-based 
organizations' jobs require a much broader array of tasks that may 
cross over the narrow and rigid boundaries of job classification 
standards and make it difficult to fit the job appropriately into one 
of the over 400 occupations. According to a recent OPM study, a key 
problem with classification is that, under present rules, 
characteristics such as workload, quality of work, and results are not 
classification factors.[Footnote 16]

As reported in a January 2003 report of the National Commission on the 
Public Service, OPM's director has noted that "continued reliance on 
this antiquated system is comparable to insisting that today's offices 
use carbon paper and manual type writers."[Footnote 17] Furthermore, 
NAPA in its July 2002 report for the National Commission on the Public 
Service concluded that classification and compensation systems must be 
based on work and 
performance rather than position.[Footnote 18] The NAPA panel 
recommendations included abolishing the General Schedule and developing 
a modern system for defining and valuing work, which could help to make 
the hiring process more results-oriented and efficient. The National 
Commission on the Public Service recommended that operating agencies 
need more flexible personnel management systems. The commission 
recommended abolishing the General Schedule and as a default position, 
recommended a broadband system under which the 15 pay grades and salary 
ranges would be consolidated into six to eight broad bands with 
relatively wide salary ranges.[Footnote 19]

Actions Under Way:

Some agencies have automated the complicated classification process to 
reduce the time it takes to carry out this task. For example, the Army 
created a centralized database that gives Army HR managers access to 
active position descriptions and position-related information to help 
with the classification process. In addition, OPM has revised the 
standards for several job series, including health care professions and 
law enforcement, to make them clearer and more applicable to the 
current duties and responsibilities of the occupations. But such steps 
are only partial solutions to the classification issue. OPM points out 
that the classification standards and process need to be reformed. 
Changes to the Classification Act of 1949 are needed to make 
fundamental changes to how jobs are defined and pay is set. 
Specifically, OPM believes that the time may have come for substantive 
reform that brings the era of the General Schedule classification 
system to a close. OPM recognizes the need to maintain the General 
Schedule in the absence of an alternative and well-managed transition 
to any new system.[Footnote 20]

Job Vacancy Announcement Content Cited as Hampering the Hiring Process:

The Problem:

Several HR directors we interviewed for this study cited the content of 
job announcements as a factor that hampered or delayed the hiring 
process. These HR directors noted that job announcements are frequently 
incomprehensible and make it difficult for applicants to determine what 
the jobs require, and therefore do not serve as effective recruiting 
tools. A February 2000 MSPB study stated that federal job announcements 
generally appeared to be written for people already employed by the 
government and that the use of jargon and acronyms is a common 
problem.[Footnote 21] The study noted that some announcements were 
lengthy, difficult to read on-line, and only gave brief or vague 
descriptions of the duties to be performed. Vague job descriptions make 
it difficult for applicants to describe how their knowledge, skills, 
and abilities are related to the job. MSPB also noted that almost no 
announcements included information on retirement and other benefits, 
such as vacation time and medical and health insurance, which might 
entice people to apply. The study recommended that OPM and agencies 
improve how vacancy announcements are posted on the Internet. The 
report said making them more visually appealing, informative, and easy 
to navigate could also make announcements more effective as a 
recruiting tool. In a December 2002 report on federal vacancy 
announcements, MSPB reported that its review of the quality of 100 
vacancy announcements posted on USAJOBS indicated that 53 percent were 
poor, 2 percent were good, while 45 percent were judged 
acceptable.[Footnote 22] The problems in the vacancy announcements 
included poor organization and readability, unclear job titles and 
duties, vague or restrictive qualification standards, and the use of 
negative language or tone that might deter many qualified candidates.

Actions Under Way:

Both agencies and OPM are taking some steps to address this problem. 
For example, the Department of Health and Human Services rewrote one of 
its typical vacancy announcements for budget analysts to make it more 
understandable and appealing to applicants outside the government. 
Instead of the typical language such as "incumbent is responsible for 
monitoring the results of budget execution and formulation input from 
six regional budget offices in coordination with the controller," the 
announcement's language began with "For the energetic individual who 
wants a challenging career with growth and advancement opportunities, 
we have positions available that will challenge to you to grow and 
learn [and are on] the cutting edge of the nation's health and human 
service policy and provide vital information and support required by 
our policy makers." In addition, the job announcement was posted on a 
private sector job search site and in The Washington Post employment 
section. This approach garnered more than 100 qualified applicants per 
position, compared to 20 qualified applicants per position under the 
traditional announcements on USAJOBS Web site.[Footnote 23]

To address unclear job announcements, OPM has initiated an interagency 
project to modernize federal job vacancy announcements, including 
providing guidance to agencies to enhance announcements, and 
instituting a multiprong approach to using e-government technology to 
assist job seekers and employees governmentwide. Specifically, OPM has 
improved the Web site to strengthen the job search engine, rewritten 
the USAJOBS by Phone system to improve speech recognition, and 
redesigned the way vacancy announcements appear on the Web site. 
Currently, OPM is seeking contractor support for its USAJOBS to make it 
easier and quicker for people to find federal jobs and to enhance the 
site's "eye-catching" appeal.

Key Assessment Tool and Related Hiring Programs Are Ineffective:

The Problem:

Several HR directors and human capital experts have found problems with 
candidate assessment tools, particularly those associated with filling 
entry-level professional and administrative occupations covered by the 
Luevano Consent Decree of 1981. In addition, both OPM and MSPB noted in 
studies that there is a need to develop new assessment tools for 
occupations and higher-grade levels that are not covered by the Luevano 
decree that are more efficient and valid predictors of future job 
performance. Primary responsibility for developing assessment tools 
rests with the agencies, but frequently agencies do not have the 
expertise or resources to develop them. In addition to problems found 
with assessment tools, two hiring authorities set forth in the Luevano 
Consent Decree --Outstanding Scholar and Bilingual/Bicultural--may not 
be merit based.

Several HR directors we met with and a NAPA study found that the 
Administrative Careers with America (ACWA) self-rating schedule 
examination procedure that is currently used to competitively fill most 
positions covered by the Luevano decree was cumbersome, delayed hiring, 
and often did not provide quality candidates. The Luevano decree called 
for eliminating the use of the Professional and Administrative Career 
Exam (PACE) and required replacing it with alternative examination 
procedures.[Footnote 24] The ACWA exam, which was developed by OPM for 
Luevano positions, was generally administered by OPM to applicants. 
Agencies entered into reimbursable contracts with OPM to receive lists 
of candidates who passed the exam. OPM has now delegated authority to 
administer the ACWA exam to agencies' delegated examining 
units.[Footnote 25] In addition, some exams have been developed to 
replace ACWA for a few occupations.

Agency managers criticized the ACWA examination because they said it is 
not merit based, according to a NAPA study.[Footnote 26] The ACWA 
rating-schedule examination contains 157 multiple-choice questions 
that distinguish among qualified applicants on the basis of their self-
rated education and life experience, rather than on their relative 
knowledge, skills, and abilities for the vacant position.[Footnote 27] 
The study reported that agencies said the ACWA examination is not 
relevant to specific jobs and occupations and therefore does not result 
in lists of "qualified individuals … solely on the basis of relative 
ability, knowledge, and skill"--a key merit systems principle.

Consequently, many agencies reported that the primary reason they did 
not use the ACWA test was their past experience with the quality of the 
candidates. In a more recent study, NAPA recommended that the ACWA 
examination system be terminated and agencies be permitted to hire for 
professional and administrative occupations using techniques that are 
proven more operationally efficient and effective in meeting diversity 
shortfalls.[Footnote 28] Also, MSPB recommended that OPM develop new 
assessment tools for the occupations covered under the Luevano Consent 
Decree.[Footnote 29]

HR directors and other officials illustrated numerous problems with the 
ACWA exam. For example, the Deputy Assistant Commissioner for Human 
Resources at the Social Security Administration said that the ACWA 
examination process used for its mainstream entry-level positions--
claims representative, computer specialist, criminal investigator, and 
regional support position--covered by the Luevano Consent Decree is 
cumbersome, bureaucratic, and labor intensive. In another example, 
officials of a major military installation said that recruiting 
accountants and financial managers was hampered by the ACWA 
examination. They noted that managers believed the test was not an 
effective screen to identify quality candidates--a theme consistent 
with the NAPA study. They also pointed out that applicants were "turned 
off" to federal employment by the lack of relevance of many of the exam 
questions to the specific jobs for which they were applying.

Agencies cited the Outstanding Scholar program as a quick way to hire 
quality college graduates for positions covered by the Luevano decree. 
The Outstanding Scholar program and Bilingual/Bicultural program were 
authorized by the Luevano Consent Decree as supplemental tools to 
competitive examination. These programs were aimed at addressing the 
under representation of African-Americans and Hispanics in the 
workplace. Many HR directors and officials viewed the Outstanding 
Scholar program as a way to hire quality candidates without getting 
involved in the complexities of the OPM examination process.

However, OPM and MSPB have commented that this is an inappropriate use 
of the authority. This hiring authority uses both baccalaureate grade 
point average and class standing as eligibility criteria for 
appointment. This authority allows candidates who meet the eligibility 
criteria to be directly appointed without competition and operates 
without regard to veterans' preference or the rule of three (see 
discussion about the rule of three and veterans' preference later is 
this report). MSPB has noted, however, that eligibility criteria based 
on grade point average and class rank are highly questionable as valid 
predictors of future job performance and that they unnecessarily deny 
employment consideration to a large segment of the applicant pool who 
meet basic job qualification requirements.

MSPB also has concerns about the Bilingual/Bicultural program because 
it permits the hiring of individuals who need not be the best qualified 
and avoids veterans' preference. This hiring program permits an agency 
to directly hire an applicant who obtained a passing examination score, 
without further regard to rank, when the position should be filled by 
an incumbent with bilingual or bicultural skills and the applicant has 
the requisite skills. MSPB has also recommended abolishing both the 
Outstanding Scholar and Bilingual/Bicultural programs because other 
competitive hiring methods have been more effective in hiring 
minorities and because they are not merit based.

For positions that are not covered by the Luevano Consent Decree, 
agencies typically examine candidates by rating and ranking them based 
on their experience, training, and education, rather than testing them. 
MSPB noted that the government's interest is not well served if 
agencies do not have the resources and expertise to make high quality 
case examining determinations. According to MSPB, agencies use of 
computer-based assessments is increasing. MSPB notes this has 
implications for OPM because the validity of computer-based assessments 
and ranking is critical to ensuring that hiring is based solely on 
merit.[Footnote 30] Computer-based assessments would also have 
implications for category rating systems that are now permitted by the 
Homeland Security Act of 2002.

In general, both OPM and MSPB are concerned about the validity of 
assessment tools for all occupations and advocate that agencies improve 
their assessment instruments. Under a largely decentralized approach, 
agencies' delegated examining units make decisions on which assessment 
tools or methods to use and on the development of new assessment tools. 
However, experts have noted that that there has been a lack of 
specialized experience in many agencies to develop and maintain valid, 
effective applicant assessment methodologies. OPM told us that because 
of budget constraints, it has spent more of its resources on services 
for which agencies are willing to pay rather than on providing tools 
that it might have believed to be more valuable, like assessment 
instruments. OPM also noted that many agencies do not have the 
technical expertise, funding, or time to develop valid assessment 
tools. MSPB concluded in a recent report that OPM is a logical 
organization to which agencies should be able to turn for help in 
developing valid assessment tools and systems, but is not funded to 
provide that assistance except on a reimbursable basis.[Footnote 31]

Actions Under Way:

OPM recognizes that it must do more to improve assessment tools. In its 
fiscal year 2003 performance plan, OPM included a strategic objective 
that, by fiscal year 2005, governmentwide hiring selections are to be 
based on comprehensive assessment tools that assess the full range of 
competencies needed to perform the jobs of the future.

Manual Processes Are Time Consuming and Paperwork Intensive:

The Problem:

A key problem noted by many HR directors is that much of the hiring 
process is done manually. Among the most frequently cited factors that 
hampered or delayed hiring were the logistics of convening assessment 
panels and the time-consuming process of manually rating and ranking 
job applicants. Twelve agency HR directors we interviewed commented 
that manually rating and ranking candidates, or the panel process, was 
a significant cause of delay in hiring. In addition, time-consuming and 
paperwork-intensive record keeping is needed to document the rationale 
of assessment panel ratings.

Prior to assessing applicants based on their relative merits, agencies 
must conduct a screening process to determine if applicants meet 
eligibility requirements (e.g. are U.S. citizens) and the basic or 
minimum education or work experience qualifications that OPM 
established for such a position. In a manual hiring system, staff 
members would have to review all the applications and document why an 
applicant did or did not meet minimum qualifications. If there are a 
large number of applicants, carrying out this process can be time 
consuming.

Once the applicants' eligibility is determined, agencies typically 
undertake a labor-intensive effort to establish and convene assessment 
panels and manually rate and rank the candidates based on their 
relative merits. According to one of the HR directors we met with, the 
logistics of setting up an assessment panel meeting makes for long 
delays in the hiring process, in some cases up to 1 month. Some of the 
delay is due to assembling the appropriate managers and subject matter 
experts, coordinating their availability, and factoring in the 
exigencies of other demands and travel time. Once the panel is formed, 
the panel sorts through all of the applicants' paperwork, assesses the 
applicants, and determines a numerical score for each applicant by 
rating the education and experience described by the applicant against 
the evaluation criteria in the crediting plan for the position. At this 
point, any applicable veterans' preference points are added to the 
applicants' score. As mentioned previously, the Homeland Security Act 
of 2002 permits an agency to use a category rating system that might 
make assessing candidates less complex and time consuming.

Automation has the potential to streamline operations by electronically 
rating and ranking applicants, or placing them in quality categories, 
eliminating the need to form assessment panels, and greatly reducing 
the paperwork burden associated with manual assessments. An automated 
system creates an easily assessable audit trail so that managers and HR 
staffs could document their decisions. In addition, an automated system 
could electronically determine if an applicant met the basic 
qualifications and electronically notify the applicant of his or her 
eligibility for the job for which he or she applied.

Actions Under Way:

Nineteen of the 24 agency HR directors we met with said they had 
automated or planned to automate at least a portion of their hiring 
processes. Some of these agencies have automated or planned to automate 
the rating and ranking processes. Agencies have used private vendors or 
have contracted to use OPM's USA Staffing automated hiring package.

USGS automated its hiring system and estimated that it cut hiring time 
from the close of a job announcement to issuing a job certificate from 
30 to 60 days to under 7 days. USGS's automated system is a 
computerized employment application processing system, which automates 
many of the functions and tasks of the competitive examination process. 
It electronically prescreens applicants and rates and ranks applicants 
according to specified job-related criteria. This also eliminates the 
need to convene rating and ranking panels and reduces the paperwork and 
administrative burden associated with documenting manual rating and 
ranking. The system also electronically refers the job certificate to 
the selecting official who has the rating and ranking data, résumés, 
and other information on his or her desktop, an improvement in 
efficiency. Furthermore, it makes recruiting data available on-line to 
authorized staff members. Applicant benefits include user-friendly on-
line application and timely feedback on the status of applications. 
NAPA chronicled the success of USGS's automated system in a 2001 
report. The report notes that 1 year after being implemented, "it is 
clear that the program is a huge success."[Footnote 32] The report lays 
out the successes based on USGS information to include a significant 
reduction of processing time a reduction of 1,800 staff days of work, 
and a nearly tenfold increase in the number of applicants for many of 
its announcements.

Census also automated its hiring process. The impetus for Census to 
change from its manual hiring system to the automated system for its 
occupations covering the majority of its ongoing hiring needs--
information technology specialist, statistician, and mathematical 
statistician--was a large number or positions (500 positions) and 
urgent hiring needed for the 2000 Census.[Footnote 33] The agency put 
together a team of managers, human resource staff, and programmers and 
worked with OPM to automate hiring for these three occupations. In 
1998, Census automated their hiring system through OPM for the three 
occupations. Under this system, OPM posts continuously open vacancy 
announcements for multiple grade levels. As part of a contract with 
Census, OPM receives the applications and maintains an inventory of 
applicants on its system and can rate and rank the applicants and 
generate a job certificate for Census within 3 days of the request for 
a certificate. Since there is no closing date for job announcements, 
many phases of the typical federal hiring process have been completed 
in advance of a Census request for a certificate. Census managers 
provide quality-ranking factors to OPM when they request a job 
certificate. In addition, Census managers have electronic access to 
information on the applicants because OPM updates Census's database 
daily. Census officials told us that additional applicant information 
collected by recruiters on college campuses provides managers pertinent 
skill data, which could eliminate personal interviews. Census estimated 
that time to hire declined from 3 to 4 months to a week or less. For 
other occupations, Census continues to use its manual competitive 
examination hiring process to hire people from outside the government.

The Rule of Three Limits Managers' Choice of Quality Candidates:

The Problem:

One of the largest obstacles to the federal hiring process mentioned in 
our interviews with HR directors was the rule of three. Specifically, 
15 of the 24 HR directors we met with raised concerns about the 
negative impact of the rule of three on hiring. Once the panel has 
rated and ranked the candidates and applied applicable veterans' 
preference points, the panel refers a sufficient number of candidates 
to permit the appointing officer to consider three candidates that are 
available for appointment. The selecting official is required to select 
from among the top three ranked candidates available for appointment--
this is the rule of three.[Footnote 34] If a candidate with veterans' 
preference is on the list, the selecting official cannot pass over the 
veteran and select a lower ranking candidate without veterans' 
preference unless the selecting official's objection to hiring the 
veteran is sustained by OPM.[Footnote 35] The Homeland Security Act of 
2002, enacted in November 2002, now permits agencies governmentwide to 
use category rating in lieu of numerical ranking and adherence to the 
rule of three.[Footnote 36] OPM currently is drafting implementing 
guidance for this provision. A more complete description of category 
ranking is included in appendix II. It will be important for agencies 
to adopt category ranking to improve their hiring processes.

Choosing from among the top three candidates is problematic for a 
variety of reasons. MSPB noted in its study on the rule of three that 
"the examination procedures underpinning this hiring rule vary in their 
ability to make fine distinctions among candidates." Further, veterans' 
preference points are added to the imprecise numerical score generated 
through the panel's examination process, which can result in veterans 
being ranked among the top three candidates. The result can be several 
candidates with the exact same score. When more than three candidates 
have the same score, examining offices may need to break the tie, 
usually by electing three of the candidates at random.

Since current assessment tools cannot make fine distinctions between 
applicants, encouraging selection from as many qualified candidates as 
is reasonable enhances merit-based hiring. The MSPB conducted an in-
depth study of the rule of three and its interaction with veterans' 
preference.[Footnote 37] MSPB concluded that given the limits of the 
examining process to predict future job performance, the curb on the 
number of candidates from which managers may select does not represent 
good hiring policy. It also noted that the rule of three's original 
purpose was to provide choices.

For several years, federal human capital experts said that categorical 
rating or grouping could provide an alternative to the rule of three 
methods and expand the number of candidates that a selecting official 
could choose from while protecting veterans' preference. Both NAPA and 
MSPB supported abolishing numerical ranking and the rule of three and 
replacing them with category rating that would allow officials to 
select among candidates that were placed in a high-quality category. 
However, candidates with veterans' preference placed in the high-
quality category would be hired before candidates without veterans' 
preference. OPM also supported allowing agencies to use category rating 
in lieu of numerical ranking and the rule of three.

Actions Under Way:

The Department of Agriculture's ARS and FS tested and implemented 
category rating in lieu of numerical ranking and the rule of three 
under an OPM demonstration project. The final 5-year evaluation of the 
project showed that (1) the number of candidates per job announcement 
increased, (2) more candidates were referred to managers for selection, 
(3) hiring speed increased, and (4) there was greater satisfaction with 
the hiring process among managers. On average, there were from 60 
percent (ARS) to 70 percent (FS) more applicants available for 
consideration under the demonstration project quality grouping 
procedure than under the standard rule of three and numerical ranking. 
A higher percentage of veterans were hired in the ARS and about the 
same percentage of veterans were hired by the FS compared with using 
the rule of three process. Specifically, at ARS 16.3 percent of all 
hires were veterans using categorical ranking, while just 9.5 percent 
were veterans using the rule of three. At ARS, the average length of 
time to hire was about 25 days quicker than at comparison sites. At FS, 
the time to hire was quicker, but the difference was not significantly 
different. Appendix II contains more information on the categorical 
ranking project carried out by the ARS and FS.

As noted previously, the Homeland Security Act of 2002, enacted in 
November 2002, included a governmentwide provision that OPM or an 
agency to which OPM has delegated examining authority may establish 
category rating systems for evaluating applicants for positions in the 
competitive service. Under this provision a selecting official can 
select anyone placed in the top category. However, a candidate with 
veterans' preference who is placed in the top category could not be 
passed over by a selecting official unless objection to hiring the 
veteran is sustained by OPM. OPM is currently drafting guidance to 
implement this new flexibility.

OPM's Role and Performance in the Federal Hiring Process:

OPM has recognized that the hiring system needs improvement and, as 
pointed out earlier in this report, is taking a number of actions to 
address governmentwide hiring challenges. OPM's current strategic plan 
includes a major objective to "Increase the effectiveness and 
efficiency of the Federal hiring process and make Federal employment 
attractive to high-quality applicants of diverse backgrounds." To meet 
this objective, OPM has identified a number of strategies, including 
reducing regulatory burdens that hamper hiring, increasing recruitment 
through e-government initiatives, and identifying other governmentwide 
solutions to improve the hiring process. In addition, last spring OPM 
announced a hiring initiative that is designed to create momentum for 
success, build the image of public service, and fix the hiring process. 
A number of actions have already taken place in the first wave. In July 
2002, OPM announced the development of a hiring preferred practices 
guide and asked agencies to contribute examples of how they had 
optimized existing hiring flexibilities. Also, last summer OPM held the 
government's first "virtual job fair" for information technology 
workers that demonstrated that critically needed staff could be hired 
effectively and efficiently. OPM said that in the coming months it will 
identify other projects and proposals that will address systemic 
problems associated with the hiring process. It will include deploying 
competency-based qualifications, improving entry-level hiring, and 
updating and modernizing exam scoring policy.

Our survey of HR directors in the fall of 2001 and then again in the 
fall of 2002 showed mixed views on whether OPM helped or hindered the 
hiring process in their agencies. Specifically in 2001, 13 thought OPM 
helped, 5 thought OPM neither helped nor hindered, and 5 thought OPM 
hindered their hiring processes. In 2002, 9 thought OPM helped, 9 
thought OPM neither helped nor hindered, and four thought OPM hindered 
the processes. Details of our survey are included in appendix III.

HR directors we talked with identified other actions that OPM took to 
help their departments or agencies improve their hiring processes. 
These processes included delegation of examination authority, providing 
human capital expertise, and providing the USAJOBS and USA Staffing 
programs. The HR directors also identified areas in which OPM could 
take a more active role. Foremost, agencies said that OPM needed to be 
a more proactive resource and enhance its role as a "clearinghouse" of 
information and provide more guidance and better expertise to agencies. 
Agencies explained that OPM needed to provide information and "best 
practices" associated with automating the hiring process. They also 
noted that OPM could do more to address key obstacles in the hiring 
process, including outdated classification standards and inadequate 
assessment tools.

Conclusions:

Improving the federal hiring process is critical as the number of new 
hires is expected to increase substantially to address the security 
needs arising from the terrorists attacks of September 11,2001, and to 
replace the large number of employees expected to retire over the next 
few years. Agencies are responsible for maximizing the efficiency and 
effectiveness of their hiring processes within the current statutory 
and regulatory framework. Steps toward a higher-level hiring system 
include using a data-driven approach to identify hiring barriers and 
ways to overcome them. A key step includes automating the hiring 
process, which may drive efficiency and reduce the administrative and 
paperwork burden. Innovative and best practices of model agencies need 
to be made available to other agencies in order to facilitate the 
transformation of agency hiring practices from compliance based to one 
focused on the agencies' missions. While many improvements to hiring 
processes can be made by agencies themselves, OPM has recognized that 
it needs to do more to address some key governmentwide problems.

Recommendations for Executive Action:

OPM's hiring initiatives are moving in the direction that will help 
agencies improve their hiring processes. OPM can assist agencies by 
helping the agencies to improve and streamline their hiring processes 
by taking a comprehensive and strategic approach. Consistent with its 
current efforts to improve the federal hiring process, OPM needs to 
take a number of specific actions to strengthen federal hiring. 
Accordingly, as a part of its overall hiring initiative, we recommend 
that OPM:

* study how to simplify, streamline, and reform the classification 
process;

* assist agencies in automating their hiring processes;

* continue to assist agencies in making job announcements and Web 
postings more user friendly and effective;

* develop and help agencies develop improved hiring assessment tools; 
and:

* review the effectiveness of the Outstanding Scholar and Bilingual/
Bicultural Luevano Consent Decree hiring authorities.

Agency Comments and Our Evaluation:

OPM and DOD provided written comments on a draft of this report. 
Technical comments were provided orally by USGS and via email by 
Census, ARS, and FS. These technical comments have been incorporated 
into the report.

OPM generally agreed with the conclusions and recommendations in the 
report. However, OPM expressed several concerns with our methodology. 
It believes the section on the classification and position description 
process could be misleading because the majority of jobs are filled 
without this step. We agree, but note that the more important problem 
with the classification process is that inaccurate position 
descriptions and related pay determinations that result from the job 
classification could hamper efforts to fill the positions with the 
right employees. OPM also believed that our draft missed an opportunity 
to hold agencies more accountable for their hiring processes. 
Throughout the draft, we note that agencies are primarily responsible 
for their hiring processes and provide concrete examples of what some 
agencies have done to improve their processes. OPM also provides 
several examples of actions it is taking to improve the hiring process. 
Finally, OPM questioned our methodology of meeting with agency HR 
directors to assess how well OPM is assisting agencies in improving 
their hiring processes. It believes that chief operating officers would 
provide a better perspective of agency recruiting and retention issues. 
While we agree these officials could provide perspective about the 
results of the hiring process, agency HR directors better understand 
and are responsible for their agencies' hiring processes.

DOD noted several areas where it believed that OPM needed to do much 
more to address governmentwide hiring problems. We agree that OPM 
should do more to improve governmentwide hiring and include several 
recommendations to OPM.

:

As agreed with your offices, unless you publicly release its contents 
earlier, we plan no further distribution of this report until 30 days 
from its date. At that time, we will send copies of this report to the 
Chair, Senate Committee on Governmental Affairs, the Chairman, House 
Committee on Government Reform, the Chairwoman of the Subcommittee on 
Civil Service and Agency Organization, House Government Reform. We will 
also send copies to the Director of OPM, the Secretary of the Army, the 
Secretary of Commerce, the Secretary of Interior, and the Secretary of 
Agriculture. We will also make copies available to others upon request. 
In addition, the report will be made available at no charge on the GAO 
Web site at http//:www.gao.gov.

If you have any questions about this report, please contact Edward 
Stephenson or me on (202) 512-6806. Key contributors to this report are 
listed in appendix VI.

J. Christopher Mihm 
Director, 
Strategic Issues:

Signed by J. Christopher Mihm: 

List of Requesters:

The Honorable Joseph I. Lieberman 
Ranking Minority Member 
Committee on Governmental Affairs 
United States Senate:

The Honorable Daniel K. Akaka 
Ranking Minority Member 
Subcommittee on Financial Management, the Budget and International 
Security 
Committee on Governmental Affairs 
United States Senate:

The Honorable George V. Voinovich 
Chairman 
The Honorable Richard J. Durbin 
Ranking Minority Member 
Subcommittee on Oversight of Government Management, the Federal 
Workforce and the District of Columbia 
Committee on Governmental Affairs 
United States Senate:

The Honorable Thad Cochran 
United States Senate:

The Honorable Danny K. Davis 
Ranking Minority Member 
Subcommittee on Civil Service and Agency Organization 
Committee on Government Reform 
House of Representatives:

The Honorable Dave Weldon, M.D. 
House of Representatives:

[End of section]

Appendixes:

Appendix I: Federal Hiring Using the Competitive Service or the Excepted 
Service:

Federal civil service employees, other than those in the Senior 
Executive Service (SES) are employed in either the competitive service, 
5 U.S.C. § 2102(a), or the excepted service, 5 U.S.C. § 
2103(a).[Footnote 38] The competitive service examination process is 
one of the processes intended to ensure that agencies' hiring 
activities comply with merit principles. This includes notifying the 
public that the government will accept applications for a job, 
screening applications against minimum qualification standards, and 
assessing applicants' relative competencies or knowledge, skills, and 
abilities against job-related criteria to identify the most qualified 
applicants. Federal agencies typically examine or assess candidates by 
rating and ranking them based on of their experience, training, and 
education, rather than by testing them.[Footnote 39]

Except as noted before, Title 5 of the U.S. Code requires federal 
examining offices to give job applicants numerical scores and refer 
candidates for employment to selecting officials based on their scores. 
Higher scores theoretically represent greater merit and thus improve 
candidates' employment opportunities. In addition, veterans' 
preference requires augmenting scores of certain individuals because of 
military service performed by them or members of their 
families.[Footnote 40] The rule of three requires managers to select 
from among the top three numerically ranked candidates available for 
appointment.[Footnote 41] However, if a candidate with veterans' 
preference is among the top three candidates, the manager cannot pass 
over the veteran and select a lower ranked candidate without veterans' 
preference unless the selecting official's objection to hiring the 
veteran is sustained by the Office Of Personnel Management 
(OPM).[Footnote 42] Ensuring that these objectives are met involves 
several basic steps and the preparation of extensive supporting 
documentation.

Soon agencies will have greater flexibility under the competitive 
service examination process with the option of using category ranking. 
The Homeland Security Act of 2002, enacted on November 25, 2002, has a 
governmentwide provision that will now permit agencies to establish 
category rating systems for evaluating applicants by placing them in 
two or more quality categories based on merit.[Footnote 43] The rule of 
three does not apply, and selecting officials can select anyone placed 
in a best-qualified category. However, if a candidate with veterans' 
preference is placed in a best-qualified category, the veteran cannot 
be passed over and must be selected unless the selecting official's 
objection to hiring the veteran is sustained by OPM. OPM is currently 
drafting guidance to implement this legislation.

[End of section]

Appendix II: Description of Category Rating Project Carried Out by the 
Agricultural Research Service and the Forest Service:

A Department of Agriculture demonstration project carried out by the 
Agricultural Research Service (ARS) and the Forest Service (FS) 
demonstrated that category rating, or quality grouping, can provide 
managers with a larger pool of applicants from which to choose than 
numerical ranking and the rule of three, while protecting veterans' 
preference. ARS and FS believed that the rule of three hampered their 
ability to hire the people they needed. From 1990 to 1998, ARS and FS 
carried out the U.S. Department of Agriculture Personnel Management 
Demonstration Project, authorized by the Office of Personnel Management 
(OPM).[Footnote 44] The purpose of the project was to develop a 
recruitment and selection program for new hires that was flexible and 
responsive to local recruitment needs. This was the first demonstration 
project testing a comprehensive simplification of the hiring system for 
both blue and white-collar federal employees.

The project tested the use of category rating as an alternative hiring 
process. Instead of numerical rating and ranking that required 
selection from the highest three scorers under the rule of three, under 
category rating applicants meeting minimum qualification standards are 
placed in one of two groups (quality and eligible) on the basis of 
their education, experience, and ability. All candidates in the quality 
group are available for selection; however, if the quality group 
contains a veteran, the veteran must be hired unless an objection to 
hiring the veteran is sustained. If the number of candidates falling 
into the quality group is inadequate, applicants from the eligible 
group can also be referred to the manager for selection.

As noted before, evaluations of this demonstration project showed it to 
be effective. Because there was no mechanism in current law to make a 
demonstration project permanent, innovations that were tested 
successfully in demonstration projects could not be implemented 
permanently in the testing agency unless authorized by Congress in 
special legislation. The demonstration project at the Department of 
Agriculture was made permanent through legislation in October 
1998.[Footnote 45]

[End of section]

Appendix III: Objectives, Scope, and Methodology:

As agreed with the requesters and in accordance with discussions with 
their offices, the objectives of this study were to:

* identify major factors that hamper or delay the federal hiring 
process;

* provide examples of innovative practices or approaches used by 
selected agencies to improve their hiring processes and have the 
potential to be adapted by other agencies; and:

* identify opportunities for the Office of Personnel Management (OPM), 
agencies, and others to improve the federal hiring process.

We reviewed the practices associated with how the government hires 
people from outside the government for competitive service positions, 
including entry-level and higher graded General Schedule positions. We 
focused our work on the competitive examination process used to fill 
those positions because that is usually the way that most agencies 
bring people into their organizations. In addition, we obtained 
information on special hiring authorities that are frequently used to 
hire people for entry-level positions and that may supplement the 
competitive examination hiring process. We did not review in detail how 
the government fills positions through merit promotions with people who 
are already employed by the federal government.

To identify major factors that hamper or delay the competitive hiring 
process, we first reviewed our prior work and extant literature on 
federal hiring. We also interviewed experts and obtained their studies 
at:

* the U.S. Merit Systems Protection Board (MSPB), a federal agency that 
hears and decides civil service cases, reviews OPM regulations, and 
conducts studies of the federal government's merit system;

* the National Academy of Public Administration, an independent 
nonpartisan, nonprofit, congressionally chartered organization that 
assists federal, state, and local governments in improving their 
performance;

* the National Partnership for Public Service, a nonpartisan 
organization dedicated to revitalizing the public service; and:

* OPM, the federal government's human resources (HR) agency.

We used experts' findings or observations to augment information we 
obtained from federal agencies and incorporated them into our report as 
appropriate. We then reviewed the pertinent laws, Code of Federal 
Regulations and OPM's Delegated Examining Operations Handbook that 
governs the competitive examination hiring process in order to describe 
how the hiring process works and to later describe what agency human 
resource directors and studies identified as steps, processes, or 
regulatory requirements that hampered or delayed hiring. In addition, 
we reviewed data on hiring contained in OPM's Central Personnel Data 
File.

Next we gathered information on our three objectives by conducting 
semistructured interviews with the HR directors of the 24 largest 
federal departments and agencies. The interviews were conducted from 
September through December 2001. The open-ended questions were 
categorized and coded and entered into a database we created. Responses 
to closed questions on how significant a problem time to hire was were 
also entered into our database. At least two staff reviewers 
collectively coded the responses from each of the 24 interviews, and 
the coding was verified when entered into the database.

In addition to these interviews with HR directors, we conducted brief 
surveys of these 24 directors in both the fall of 2001 and fall of 
2002.[Footnote 46] All 24 HR directors responded to both surveys. 
During the period between the 2001 and 2002 surveys, 16 of the 24 
individuals left their positions.

The results of each of these surveys are shown in table 3.

Table 3: Survey Responses from 24 HR Directors:

Question: To what extent is the time needed to fill a position, or 
"hiring time," a problem within your department /agency?; Response: 
Little or no extent; Fall 2001: 0; Fall 2002: 0.

Response: Some extent; Fall 2001: 2; Fall 2002: 3.

Response: Moderate extent; Fall 2001: 7; Fall 2002: 8.

Response: Great extent; Fall 2001: 13; Fall 2002: 10.

Response: Very great extent; Fall 2001: 2; Fall 2002: 3.

Response: No basis to judge/NA; Fall 2001: 0; Fall 2002: 0.

Question: Overall, would you say that OPM has helped or hindered the 
hiring process in your department/agency?; Response: Greatly hindered; 
Fall 2001: 0; Fall 2002: 2.

Response: Somewhat hindered; Fall 2001: 5; Fall 2002: 2.

Response: Neither helped nor hindered; Fall 2001: 5; Fall 2002: 9.

Response: Somewhat helped; Fall 2001: 11; Fall 2002: 7.

Response: Greatly helped; Fall 2001: 2; Fall 2002: 2.

Response: No basis to judge/NA; Fall 2001: 1; Fall 2002: 2.

Source: GAO.

[End of table]

In order to provide examples of innovative practices or approaches used 
by selected agencies to improve their hiring processes and that have 
the potential to be adapted by other agencies, we conducted a second 
phase of interviews at five selected agencies from February through 
November 2002: Department of Agriculture's Agricultural Research 
Service (ARS) and Forest Service (FS), U. S. Geological Survey (USGS), 
U.S. Census Bureau (Census), and Department of the Army (Army). We 
selected those agencies based on interviews with HR directors across 
government and discussions with HR experts who noted that these 
agencies had taken actions to improve their hiring practices.

We assessed the role that OPM has played in the hiring process through 
interviews with HR directors at the 24 largest departments or agencies, 
experts at MSPB and OPM, and by reviewing expert studies and other 
information. We provided a draft of this report to OPM, DOD, Census, 
ARS, FS, and USGS for review and comment. Their responses and comments 
are discussed at the end of the report. We did our review in Washington 
D.C., from June 2001 through January 2003 in accordance with generally 
accepted government auditing standards.

[End of section]

Appendix IV: Comments from the Office of Personnel Management:

OFFICE OF THE DIRECTOR:

UNITED STATES OFFICE OF PERSONNEL MANAGEMENT WASHINGTON, DC 20415-1000:

MAY 06 2003:

Mr. J. Christopher Mihm 
Director, Strategic Issues 
United States General Accounting Office Washington, DC 20548:

Dear Mr. Mihm:

This responds to your request for written comments on your draft report 
entitled HUMAN CAPITAL: Opportunities to Improve Executive Agencies' 
Hiring Process. We appreciate the opportunity to submit our comments 
prior to the publication of the report.

Before commenting more specifically on the contents of the report, I 
want to again bring to your attention one aspect of the fundamental 
methodology you employed in exploring how well the Office of Personnel 
Management (OPM) has been assisting agencies. We have found that agency 
human resources directors are an energetic and important source of 
expertise on the human resources operations and opportunities facing 
their agencies. We have also found that agency chief operating 
officers, the individuals primarily responsible for implementing the 
President's Management Agenda, as well as conducting the overall 
administration of their organizations, often have the best perspective 
and the widest array of information about recruitment and retention 
issues across their agencies. For that reason, I urge you to poll their 
perceptions in any future studies intended to address broad-based 
leadership issues.

As for the report, while we generally agree with its conclusions and 
recommendations, we have concerns about the methodology used to 
identify issues addressed in the report, the basis of some conclusions, 
and the omission of relevant information. We are, therefore, providing 
the following information for your consideration.

It is unclear why the five major problems discussed in the report 
(Classification and Compensation Process; Job Announcements; 
Assessment Tools Used for Luevano Occupations; Manual Processing of 
Applications; and Rating and Ranking under 
5 U.S.C. 3318) were identified. We believe more rationale could be 
given, and possibly more research done, to determine if, in fact, these 
are paramount problems. As cited in the report, there are "Actions 
Underway" in all five areas, and several will be alleviated based on 
the actions being taken. In addition, we are disappointed that quality 
of hires was not identified as an important issue rather than so much 
emphasis being placed on time-to-hire.

The basis for the conclusions reached with respect to the 
Classification Process and the Job Announcements Content include 
background information that could be misleading. Following are some 
examples:

* In discussing issues with a problematic classification system, the 
report portrays the classification process as being an arduous first 
step in the recruitment process. Realistically, the majority of 
positions filled are based on continuing position descriptions that do 
not require additional description or classification and at most, need 
a pro forma review to verify accuracy.

* The report also states that the classification system, as well as most 
standards issued thereunder, was developed decades ago when typical 
jobs were more narrowly defined. Although that statement is true for 
the statutory General Schedule grade level definitions that underpin 
the entire system, nearly 50% of the position classification standards 
have been revised within the past 15 years, with 20% updated within the 
last 5 years. Most recently, the Office of Personnel Management (OPM) 
has also been moving aggressively towards developing job family (vs. 
single occupation) standards to further simplify the system.

* The report's recommendation that OPM "study how to simplify, 
streamline, and reform the classification process" implies that we have 
not done so to date. The opposite is true. OPM undertook an in-depth 
study of the history and evolution of the Federal classification system 
as background to the white paper on pay reform cited in the report, as 
well as extensive and ongoing evaluation of multiple demonstration 
projects and agency-specific personnel flexibilities that have 
successfully simplified and streamlined the process.

OPM has also taken several actions to assist agencies in improving 
their vacancy announcements. These include July 15, 2002, and December 
9, 2002, memoranda to Human Resources Directors on "Improving Job 
Announcements" and a "Pledge to Applicants." We also issued a Fact 
Sheet for job seekers entitled "Tips for Letting Federal Employers Know 
Your Worth." In addition, our Recruitment One-Stop has been a major 
information technology initiative that has engaged an interagency team 
to review vacancy announcements, the mechanics of the automated USAJOBS 
system, and the application process itself. The efforts of this team 
will result in the following major improvements to USAJOBS upon launch 
in late spring of this year:

Job Seeker Improvements:

* Completely redesigned user interface that leverages industry best 
practices; * Dramatically improved job search engine that now includes 
full-text searching and a more intuitive search interface;

* Improved career management tools including storage of up to five 
resume versions and cover letters, and basic on-line application status 
tracking;

* Improved display and organization of job search results and vacancy 
announcement content; and:

* Rewritten USAJOBS by Phone system that features improved text-to-
speech, advanced speech recognition, streamlined navigation, and live 
operator support.

Hiring Agency Improvements:

* Real time vacancy posting;

* Improved user interface;

* Resume mining search tools for candidate sourcing;

* Workforce automation tools to improve productivity; and:

* Self-service reporting and administrative tools.

OPM is working with its interagency partners and contractor to rapidly 
implement the following major changes in Vacancy Announcements:

* Redesigning the way vacancy announcements are displayed to only show 
relevant information in a clean, easy-to-follow, tabbed format;

* Including prominent agency branding and agency marketing information 
in every announcement;

* Making detailed/legal and regulatory statements available via 
hypertext links rather than including it in the body of every 
announcement;

* Revising boilerplate announcement text to be more "user friendly";

* Developing a new tool for recruiters to construct announcements that 
will result in a higher-quality, more job seeker focused product; and:

* Delivering announcement content in a printer friendly format.

The revised vacancy announcement improvements will begin phased in 
implementation as early as mid-June of this year.

These efforts by OPM and the interagency team should be identified as 
central to improving this process, without highlighting the specific 
contractor who was awarded the contract to work with OPM on this 
effort.

We would also like to address comments made in your report about 
assessment procedures, and the ACWA rating schedules in particular. You 
reported that, "Agency managers criticized the ACWA examination because 
they said it is not merit based, according to a NAPA study," and that 
it measures education and life experience rather than knowledge, 
skills, and abilities (KSAs) - as called for by a key merit systems 
principle. In fact, the ACWA rating schedules specifically were 
developed to measure the KSAs/competencies critical for success in 
these occupations. OPM professionals followed the procedures outlined 
in the Uniform Guidelines on Employee Selection Procedures to establish 
the validity of the ACWA examination, as documented in a report to the 
Department of Justice. Even so, OPM agrees with MSPB, as stated in your 
report, that it is time to reevaluate the ACWA examination against 
other assessment
options. We are also in full agreement with MSPB in advocating "that 
agencies improve their assessment instruments" as well, as you 
highlighted in your report.

We believe the report misses an opportunity to hold agencies more 
accountable for cumbersome hiring processes. In many cases these 
processes are within the agency's control and could be improved for far 
more efficient and effective hiring. In this regard, we believe that 
your report should encourage agencies to:

* Delegate hiring authority to the lowest possible levels;

* Review their internal policies to ensure they have eliminated self-
imposed barriers that impede their hiring, such as announcing jobs for 
lengthy minimum periods; * Conduct more sophisticated workforce planning 
and develop more targeted, pro-active recruitment strategies, keeping 
in mind that veterans have been, and continue to be, one of the main 
sources of candidates for Federal jobs.

Considering veterans for jobs is nowhere near the magnitude of the 
sacrifices our veterans have made for our freedoms;

* Develop job-specific recruitment plans that identify such things as 
which colleges and universities might yield quality candidates, what 
tools are best to use under specific circumstances, etc.; and:

* Include automation as an integral part of their hiring.

Finally, the report discusses the rule of three and its limitation of 
managerial flexibility. We are very pleased that Homeland Security Act, 
Public Law 107-296, provided the authority to use category rating as an 
alternative throughout the Government. We are drafting the implementing 
regulations and look forward to providing them soon for comment. While 
the regulations will provide increased flexibility, we remain committed 
to the brave men and women who serve this Nation. The proper 
application of veterans' preference will continue to be a high 
priority.

OPM is focused on achieving positive results in each of the areas 
addressed in your report. We have realigned the agency to assist 
Federal agencies in adopting human resources management systems that 
improve their ability to build successful, high performance 
organizations. We believe we are poised to meet this challenge, and 
that these results will meet and exceed the Human Capital Standards for 
Success.

We want to thank you once again for the opportunity to comment on this 
report. For additional information or if you want to discuss these 
comments, please contact OPM Deputy Director, Dan Blair, at 202-606-
1000.

Sincerely,

Kay Coles James,
Director

Signed by Kay Coles James:

The following are GAO's comments on the Office of Personnel 
Management's (OPM) letter dated May 6, 2003.

GAO Comments:

1. OPM questioned our methodology of meeting with agency human 
resources (HR) directors to assess how well OPM is assisting agencies 
in improving their hiring processes. OPM believes that chief operating 
officers would provide a better perspective of agency recruiting and 
retention issues. While we agree these officials could provide 
perspective about the results of the hiring process, agency HR 
directors better understand and are responsible for their agency hiring 
process and most directly interact with OPM. Agency HR directors are 
therefore in an excellent position to speak to federal hiring issues 
and OPM's leadership.

2. OPM said it was unclear why we identified the five hiring problem 
areas and also that the quality of hires was not identified as an 
issue. We identified these areas based on our discussions with human 
capital and other officials across government and in our review of 
studies by the Merit Systems Protection Board and the National Academy 
of Public Administration. Our assessment of these problems considered 
the impact on the quality of hires. For example, we note in our 
discussion of the federal job classification process that it not only 
delays the hiring process for those positions requiring the development 
of job descriptions, but more important, the resulting job 
classification and related pay might not match the actual duties of the 
job. This mismatch can hamper efforts to fill the position with the 
right employee. We also note that the automated process at the U.S. 
Geological Survey increased the number of applicants--which increases 
the likelihood of filling a position with the right person. Finally, in 
our discussion of the use of the Administrative Careers with America 
(ACWA) test we note managers' concerns with the quality of candidates 
who were referred based on the test results. The recommendation to 
address this issue was primarily based on the fact that, according to 
managers, the test was not referring quality candidates.

3. OPM said that our conclusions about the classification process could 
be misleading. For example, it believes the section on the 
classification and position description process could be misleading 
because the majority of jobs are filled without this step. We agree, 
but note that the more important problem with the classification 
process is that the existing inaccurate position description and 
related pay that resulted from the job classification could hamper 
efforts to fill the position with the right employee. OPM also said 
that although it agreed that the grade level definitions that underpin 
the entire classification system are decades old, it has taken steps to 
revise position classification standards. We note in our report that 
OPM has and is continuing to revise position standards, but point out 
that the basic system needs revision. This position is not inconsistent 
with OPM's and others' views of classification. OPM's white paper on 
pay notes a key problem with classification is that, under present 
rules, characteristics such as workload, quality of work, and results 
are not classification factors. OPM and others conclude that the 
classification system needs basic revision.

4. OPM points out in its comments that it has taken several steps to 
assist agencies in improving their vacancy announcements. We recognized 
many of these actions in our actions under way section and have 
augmented the section to further outline OPM's positive steps.

5. OPM had some concerns about our comments about the ACWA test. We 
noted that managers were critical of the ACWA exam because it was not 
merit based and it measures life experiences rather than knowledge, 
skills, and abilities. OPM says the ACWA exam was specifically 
developed to measure competencies critical to the success of the 
relevant occupations. We should point out that the ACWA exam is used 
for more than 100 different occupations. Agency managers we met with 
and several studies have pointed out that the test does not refer 
quality candidates. Even though OPM in its comments defends the ACWA 
exam, it agreed that the test needs to be reevaluated. We recommend 
that OPM help agencies improve all applicant assessment tools.

6. OPM said that the report misses an opportunity to hold agencies more 
accountable for the cumbersome hiring process. Throughout the report, 
we point out that agencies are primarily responsible for improving 
their hiring processes and include several examples how the agencies we 
studied in detail took steps to improve various aspects of their hiring 
processes. These steps could be taken by agencies without any action by 
OPM. Several of our recommendations to OPM call for actions to assist 
agencies in addressing their hiring problems.

:

[End of section]

Appendix V: Comments from the Department of Defense:

OFFICE OF THE UNDER SECRETARY OF DEFENSE:

4000 DEFENSE PENTAGON WASHINGTON, D.C. 20301-4000:

APR 14 2003:

PERSONNEL AND READINESS:

Mr. J. Christopher Mihm Director, Strategic Issues U.S. General 
Accounting Office 441 G Street N.W. Washington, D.C. 20548:

Dear Mr. Mihm:

This is the Department of Defense (DoD) response to the GAO draft 
report, GAO-03-450, (Code 450034), "HUMAN CAPITAL: Opportunities to 
Improve Executive Agencies' Hiring Process," dated March 17, 2003.

While the GAO report does not contain recommendations for DoD, we 
appreciate the opportunity to offer comments. The Department's comments 
are enclosed.

Sincerely,

Charles S. Abell 
Principal Deputy:

Signed by Charles S. Abell: 

Enclosure: As stated:

Comments on GAO 03-450 Draft Report - Opportunities to Improve 
Executive Agencies' Hiring Processes April 11, 2003:

In general, it is unclear whether the study was intended to look at all 
recruitment sources (e.g., DEA, OPM Certificate, internal merit 
promotion, etc.) in its assessment. To be of maximum value, the report 
should further clarify the internal and external recruitment processes 
and delineate the fill times and inherent problems for each.

* The "Results-In-Brief 'section on page 4 indicates that "Agencies have 
the primary responsibility for streamlining and automating their hiring 
processes, but OPM also plays an important role in providing leadership 
and oversight of the merit-based employment system and helping agencies 
meet their hiring challenges." This statement is problematic for two 
reasons. First, the report goes on to recommend that OPM provide 
assistance to agencies but with limited suggestion as to how or why it 
would be done. Second, the statement belies the historical role of OPM 
and its predecessor in providing more than leadership and oversight. 
OPM develops all policy and procedures that are applied government-
wide. This report does little or nothing to examine actual steps taken 
by OPM to relieve the onerous nature of such policies and procedures 
other than several nebulous references to planning with no near-term 
delivery dates.

* Table 1 on page 5 makes several observations with no definitive 
analysis:

* While OPM points out that the job classification system is broken and 
has been for some time, it offers no near-term solution. This is not a 
new conclusion; efforts to redefine this process have been going on for 
over a decade with limited results.

* The OPM strategic plan states that by FY05 selections will be based on 
new assessment tools. We are by all accounts in a human capital crisis; 
new tools must be developed immediately and with agency involvement 
immediately.

* The Table cites the success of the U.S. Geological Survey automated 
hiring function. There are many references to the USGS's success with 
its automated function. We are concerned that the success of the system 
is evidenced in this report without an analysis of the tool itself and 
its demonstrated conformance to merit evaluation. It is our 
understanding that the USGS system is based on employee self-identified 
competencies, to include behavioral characteristics. Such systems 
require significant upfront work to determine the set of competencies 
to be applied to each position. An additional compounding problem with
the use of competency based automated staffing solutions is the amount 
of time it takes to build the list of competencies for every position. 
This point was not made in the report. In an organization the size of 
USGS, where the positions are somewhat homogeneous, this may be a 
viable solution. In an organization the size of the Department of 
Defense, an effort to convert from KSA-based selections to competency-
based selections would require several years, perhaps a decade, with 
little recognized value added.

* In the Background Section, on page 6, the report states that OPM 
delegated examining authority to agencies in 1996; however, there is no 
comparison of the procedures/timelines to OPM examination practices, 
either before or after delegation was initiated.

* On page 6 and on various other references through the report, the 
study references the "clearinghouse" role that OPM might or should play 
as it concerns staffing barriers and what they are doing to improve the 
hiring process. It does not report the delay or lack of activity by OPM 
on almost 300 staffing barriers previously identified to OPM and the 
lack of any appreciable results over the past two years. While numerous 
working groups have been announced over the past year, few meetings 
have been held and limited work has been accomplished, with the 
exception of the Recruitment One-Stop project.

* In a report recommendation on page 6, it is recommended to OPM that 
they "study" how to improve, streamline, and reform the classification 
process. Study is not needed. This process has been studied from every 
angle without producing significant results.

It is recommended that historical information be included to explain 
statistics cited in the report. For example, on page 7, third 
paragraph, GAO states that the number of new hires have substantially 
increased since the mid-1990s. However, there is no explanation 
provided to account for the increase.

* Page 8 contains an inaccurate statement that is repeated two more time 
in the report that the DoD HR Director/Deputy Assistant Secretary of 
Defense for Civilian Personnel Policy did not respond to the October 
2002 survey. Input was provided on November 11, 2002. These statements 
should be removed.

* Page 13 points out the problems with the Luevano consent decree dated 
1981; however, despite several calls for reform of that process, OPM 
has not offered
a viable alternative despite the almost two and a half decades that 
have passed. The report even mentions that MSPB recommended the 
development of new tools in September 2002. To date, no significant 
action has been taken.

* Page 13 contains information that indicates that examining for 
Administrative Careers with America (ACWA) positions has been delegated 
by OPM to agencies. What is not indicated is when this authority was 
delegated (not until October 2000) and the fact that the authority 
cannot be redelegated to our Components, requiring us to approve 
Component use. There are also additional requirements that are imposed 
on Delegated Examining Units (DEU) when they are examining for ACWA 
positions that are not described in the report.

* On page 15 and on other occasions in the report, there is reference to 
OPM having something in their strategic plan that will solve a 
particular problem. Yet there is no analysis on what is being done to 
accomplish the tasks necessary to validate the strategic plan item.

* On page 18 and in several instances throughout the report, credit was 
attributed to OPM for developing new guidance. The extent of agency 
involvement is not apparent. We caution in claiming success on the 
development of OPM government-wide regulations without looking at the 
content and determining if the implementation is onerous or too 
restrictive. OPM has not engaged agencies in participating in the 
development of government-wide regulations on the government-wide 
provisions found in the Homeland Security Act of 2002. The importance 
of agency involvement in the development of government-wide rules and 
regulations is critically important and cannot be overstated. Agencies 
are going to have to implement what OPM develops and we should have the 
opportunity to be part of the development process.

* Finally, the "Recommendations For Executive Action" do not address 
many of the issues raised in these comments (e.g., timeliness, 
cooperative efforts). Most significantly, however, they do not address 
the need for OPM to review and revise policy and procedures that 
inhibit the staffing process.

The following are GAO's comments on the Department of Defense's (DOD) 
letter dated April 14, 2003.

GAO Comments:

1. We have clarified that our report only discusses new hires to the 
federal government, particularly focusing on the competitive service 
hiring process. We note that agencies can also fill positions through 
the internal merit selection process and other intergovernmental 
methods.

2. The statement that agencies have the primary responsibility for 
their hiring processes is a fact. Our report outlines several actions 
that the Office of Personnel Management (OPM) has taken to address many 
hiring problems. We agree that OPM could do more and have made several 
recommendations that address that conclusion.

3. DOD noted the lack of progress by OPM in addressing the job 
classification system and applicant assessment tools. We agree that OPM 
needs to do more and have included recommendations in that regard. It 
should be noted that agencies have the primary responsibility to 
address their hiring problems. Although some problems, such as the job 
classification system, are outside the control of agencies, others, 
such as development of assessment tools is within the responsibility 
and control of the agency. The Merit Systems Protection Board (MSPB) 
has pointed out that while agencies have the responsibility to develop 
assessment tools they often do not have the resources to do so. In 
addition, DOD said that implementing an automated hiring system like 
the one we describe at the U.S. Geological Survey (USGS) would take up 
to a decade because DOD is so large and diverse. DOD explains that 
converting from knowledge, skills, and abilities, to competencies takes 
a considerable amount of work. Although, USGS officials and we believe, 
and an independent study indicates that the specific USGS automated 
system has been successful, we are not endorsing a specific method of 
automation. Our larger point on this section is that automation can 
assist agencies with their hiring processes.

4. It is correct that we did not attempt to compare procedures and time 
lines for hiring before and after OPM delegated examining authority to 
agencies in 1996. Such a comparison probably would yield little value 
to today's discussion of hiring challenges.

5. DOD says the classification system has been studied from every angle 
without producing significant results and that more study is not 
needed. We believe that more analysis is needed to determine exactly 
how to either revise the classification system or develop an entirely 
new approach to determining job descriptions and pay determinations.

6. DOD asked that we explain why the number of new hires has increased 
since the mid-1990s. We have added text to the report that explains 
that hiring in the mid-1990s declined because many agencies were 
downsizing and did not need to fill positions. We also added that with 
the slowdown in downsizing and the increasing number of employees 
retiring, agencies are increasingly hiring new employees.

7. Our draft report had noted that DOD did not respond to our fall 2002 
survey of human resources (HR) directors. DOD explained that it 
responded to our survey of HR directors in November 2002. However, we 
did not receive itd response until April 2003. We have now included 
DOD's response in our analysis of the 2002 HR director responses.

8. DOD points out that OPM has not taken any significant action to 
address problems related to the Luevano Consent Decree. We agree that 
the problems with the Luevano Consent Decree need to be addressed and 
have made a recommendation to OPM to review the effectiveness of the 
Outstanding Scholar and Bilingual/Bicultural Luevano Consent Decree 
hiring authorities.

9. DOD notes that examining for Administrative Careers with America 
(ACWA) positions was not delegated to agencies until October 2002 and 
that the authority cannot be redelegated to components. We have added 
this information to our report.

10. DOD noted that we did not analyze the planned actions in OPM's 
strategic plan. In several areas, we have outlined actions that OPM is 
currently taking to address some of the hiring challenges, including 
some areas specific to actions indicated in OPM's strategic plan.

11. DOD notes that our report credits OPM with developing new guidance 
in several human capital areas with no indication of the involvement of 
agencies. OPM has explained that one of the vehicles it has used to 
involve agencies is the Human Resources Management Council, an 
interagency organization of federal HR directors. It should be noted 
that the recently enacted Homeland Security Act of 2002 establishes an 
Interagency Chief Human Capital Officer Council, which could replace 
the Human Resources Management Council.

[End of section]

Appendix VI: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

J. Christopher Mihm or Edward Stephenson, (202) 512-6806:

Acknowledgments:

In addition to the persons named above, John Ripper, Tom Beall, Ridge 
Bowman, Christopher Booms, Karin Fangman, Fig Gungor, Donna Miller, 
Greg Wilmoth, and Kimberly Young made key contributions to this report.

(450034):

FOOTNOTES

[1] Much of the increase in federal new hires in 2002 was due to the 
hiring of baggage screeners and other personnel in the new 
Transportation Security Administration.

[2] This report discusses the hiring of new employees into the federal 
government and focuses on the competitive service hiring process. 
Agencies can also fill vacant positions using the merit promotion 
process within their agency or through transfers from other agencies.

[3] This report was also done at the request of the Honorable Fred 
Thompson, former Ranking Minority Member, Senate Committee on 
Governmental Affairs.

[4] We have also taken a number of actions to improve our hiring 
process, including strengthening our recruitment effort and automating 
our application and ranking process.

[5] 5 U.S.C. 2301 § (b)(1).

[6] 5 U.S.C. § 1104.

[7] Agencies may also fill vacant positions with current government 
employees through competitive merit promotion. The process is less 
complicated than competitive examination of outside hires because 
neither the rule of three that limits selection to the top three 
candidates nor veterans preference apply to merit promotions. Also, 
applicants are not ranked on the basis of their numerical scores. Merit 
promotion job certificates include all of the candidates determined to 
be among the best qualified, and managers can select from any of those 
candidates.

[8] Since March 1, 2003, the Transportation Security Administration is 
part of the Department of Homeland Security.

[9] National Academy of Public Administration, Summary of Human 
Resources Management Research for the National Commission on the Public 
Service (Washington, D.C.: July 2002).

[10] U.S. Merit Systems Protection Board, Making the Public Service 
Work: Recommendations for Change (Washington, D.C.: September 2002).

[11] U.S. Office of Personnel Management, Strategic Plan 2002-2007 
(Washington, D.C.: November 2002).

[12] National Commission on the Public Service, Urgent Business for 
America: Revitalizing the Federal Government for the 21ST Century 
(Washington, D.C.: January 2003).

[13] Hart-Teeter Research, The Unanswered Call to Pubic Service: 
Americans' Attitudes Before and After September 11TH (Washington, D.C.: 
October 2001).

[14] As previously discussed, the Homeland Security Act of 2002 now 
permits category rating that expands the number of applicants that an 
agency official may choose from when filling a position. That rating 
approach should make the rating process less complex and time consuming 
than the numerical rating and ranking process.

[15] 5 U.S.C. § 5101-5115.

[16] U.S. Office of Personnel Management, A Fresh Start for Federal 
Pay: The Case for Modernization (Washington, D.C.: April 2002).

[17] National Commission on the Public Service, Urgent Business for 
America: Revitalizing the Federal Government for the 21ST Century 
(Washington, D.C.: January 2003).

[18] National Academy of Public Administration, Summary of Human 
Resource Management for the National Commission on the Public Service 
(Washington, D.C.: July 2002).

[19] National Commission on the Public Service, Urgent Business for 
America - Revitalizing the Federal Government for the 21ST Century 
(Washington, D.C.: January 2003).

[20] U.S. Office of Personnel Management, A Fresh Start for Federal 
Pay: The Case for Modernization (Washington, D.C.: April 2002).

[21] U.S. Merit Systems Protection Board, Competing for Federal Jobs - 
Job Search Experiences of New Hires (Washington, D.C.: February 2000).

[22] U.S. Merit Systems Protection Board, Help Wanted: A Review of 
Federal Vacancy Announcements (Washington, D.C.: December 2002).

[23] Government Executive, Hire Power (Washington, D.C.: February 
2002).

[24] PACE which was used to fill entry-level positions at the GS-5 and 
GS-7 level for over 100 professional and administrative occupations, 
was found to have an adverse impact on African Americans and Hispanics.

[25] In addition to the ACWA exam, OPM has developed separate 
alternative examination procedures for a number of positions covered by 
the Luevano decree. In its comments on a draft of this report, DOD 
noted that administration of the ACWA exam was not delegated to 
agencies until October 2002 and that the authority cannot be 
redelegated to components. 

[26] National Academy of Public Administration, Entry-Level Hiring and 
Development for the 21STCentury: Professional and Administrative 
Positions (Washington, D.C.: November 1999).

[27] There also is a written ACWA exam that was developed prior to the 
multiple choice exam.

[28] National Academy of Public Administration, Summary of Human 
Resources Management Research for the National Commission on the Public 
Service (Washington, D.C.: July 2002). 

[29] U.S. Merit Systems Protection Board, Making the Public Service 
Work - Recommendations for Change.

[30] U.S. Merit Systems Protection Board, Assessing Federal Job-Seekers 
in a Delegated Examining Environment (Washington, D.C: December 2001).

[31] U.S. Merit Systems Protection Board, Assessing Federal Job-Seekers 
in a Delegated Examining Environment.

[32] National Academy of Public Administration, The Quest for Talent: 
Recruitment Strategies for Federal Agencies (Washington, D.C.: 2001).

[33] These 500 positions were professional in nature and not part of 
the temporary enumerator workforce hired for the 2000 Census.

[34] 5 U.S.C. § 3318(a).

[35] 5 U.S.C. § 3318(b).

[36] Section 1312(a)(2) of Pub. L. No. 107-296 (Nov. 25, 2002).

[37] U.S. Merit Systems Protection Board, The Rule of Three in Federal 
Hiring: Boon or Bane? (Washington, D.C.: December 1995).

[38] Positions may be excepted from the competitive service by statute, 
by the President, or by the Office of Personnel Management (OPM). 5 
C.F.R. § 213.101. OPM may except positions from the competitive service 
when it determines that appointments into such positions through 
competitive examination are not practicable. 5 C.F.R. § 6.1(a). 
Excepted appointments can be under either Schedule A (e.g., chaplain 
and attorney positions), Schedule B (e.g. Student Career Experience 
Program and SES candidate development program positions), or Schedule C 
(political appointee positions). 5 C.F.R. Part 213, Subpart C.

[39] Agencies use written tests to assess certain outside candidates. 
The most important written tests are used for hiring into two groups: 
(1) GS-2, 3,and 4 entry-level clerks and technical positions, and (2) 
GS-5 and GS-7 professional and administrative positions covered by the 
Luevano Consent Decree. GS refers to General Schedule, which is the 
basic classification and compensation system for white-collar 
occupations in the federal government.

[40] 5 U.S.C. § 3309.

[41] 5 U.S.C. § 3318(a).

[42] 5 U.S.C. § 3318(b).

[43] Section 1312(a)(2) of Pub. L. No. 107-296 (Nov. 25, 2002).

[44] OPM is authorized to waive civil service laws and regulations to 
permit agencies to test alternative personnel management approaches. 5 
U.S.C. § 4703.

[45] Section 749 of Pub. L. No. 105-277 (Oct. 21, 1998).

[46] These surveys were conducted in conjunction with our work on 
personnel flexibilities. Our work on flexibilities resulted in two 
reports: Human Capital: Effective Use of Flexibilities Can Assist 
Agencies in Managing Their Workforces (GAO-03-2, Dec. 6, 2002) and 
Human Capital: OPM Can Better Assist Agencies in Using Personnel 
Flexibilities (GAO-03-428, May 9, 2003, restricted until June 9, 2003.)

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