This is the accessible text file for GAO report number GAO-04-797 
entitled 'Human Capital: Additional Collaboration Between OPM and 
Agencies Is Key to Improved Federal Hiring' which was released on June 
07, 2004.

This text file was formatted by the U.S. General Accounting Office 
(GAO) to be accessible to users with visual impairments, as part of a 
longer term project to improve GAO products' accessibility. Every 
attempt has been made to maintain the structural and data integrity of 
the original printed product. Accessibility features, such as text 
descriptions of tables, consecutively numbered footnotes placed at the 
end of the file, and the text of agency comment letters, are provided 
but may not exactly duplicate the presentation or format of the printed 
version. The portable document format (PDF) file is an exact electronic 
replica of the printed version. We welcome your feedback. Please E-mail 
your comments regarding the contents or accessibility features of this 
document to Webmaster@gao.gov.

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately.

Report to the Subcommittee on Civil Service and Agency Organization, 
Committee on Government Reform, House of Representatives: 

June 2004: 

HUMAN CAPITAL: 

Additional Collaboration Between OPM and Agencies Is Key to Improved 
Federal Hiring: 

GAO-04-797: 

GAO Highlights: 

Highlights of GAO-04-797, a report to the Subcommittee on Civil 
Service and Agency Organization, Committee on Government Reform, House 
of Representatives

Why GAO Did This Study: 

Improving the federal hiring process is critical given the increasing 
number of new hires expected in the next few years. The subcommittee 
asked GAO to report on the (1) status of recent efforts to help improve 
the federal hiring process and (2) extent to which federal agencies 
are using two new hiring flexibilities—category rating and direct-hire 
authority. Category rating permits an agency to select any job 
candidate placed in a best-qualified category. Direct-hire authority 
allows an agency to appoint individuals to positions without adherence 
to certain competitive examination requirements when there is a severe 
shortage of qualified candidates or a critical hiring need.

What GAO Found: 

Congress, the Office of Personnel Management (OPM), and agencies have 
recognized that federal hiring has needed reform, and they have 
undertaken various efforts to do so. In particular, Congress has 
provided agencies with additional hiring flexibilities, OPM has taken 
significant steps to modernize job vacancy announcements and develop 
the government’s recruiting Web site, and most agencies are continuing 
to automate parts of their hiring processes. Still, problems remain 
with a job classification process that many view as antiquated, and 
there is a need for improved tools to assess the qualifications of job 
candidates. 

On the basis of our survey of members of the interagency Chief Human 
Capital Officers (CHCO) Council, agencies appear to be making limited 
use of two new hiring flexibilities that could help agencies in 
expediting and controlling their hiring processes (see figure below). 
Frequently cited barriers to using the new hiring flexibilities 
included (1) the lack of OPM guidance for using the flexibilities, (2) 
the lack of agency policies and procedures for using the 
flexibilities, (3) the lack of flexibility in OPM rules and 
regulations, and (4) concern about possible inconsistencies in the 
implementation of the flexibilities within the department or agency.

Extent of Use of New Hiring Flexibilities: 

[See PDF for image]

[End of figure]

The federal government is now facing one of the most transformational 
changes to the civil service in half a century. Today’s challenge is 
to define the appropriate roles and day-to-day working relationships 
for OPM and individual agencies as they collaborate on developing 
innovative and more effective hiring systems. 

What GAO Recommends: 

Last year, GAO made specific recommendations that OPM work with and 
through the CHCO Council to help agencies better use human capital 
flexibilities. This includes efforts to improve hiring processes. GAO 
is thus not making additional recommendations at this time. 

In comments on a draft of this report, OPM said that agencies must make 
fixing the hiring process a priority. OPM also expressed concerns 
about our survey of CHCOs. We disagreed with OPM’s contention that 
such officials are not knowledgeable enough to respond to our survey. 
Where appropriate, the report was revised to reflect OPM’s comments.

www.gao.gov/cgi-bin/getrpt?GAO-04-797.

To view the full product, 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]

Contents: 

Letter: 

Results in Brief: 

Background: 

Previous Work by GAO and Others Has Identified Key Problem Areas in the 
Competitive Hiring Process: 

OPM and Agencies Are Taking Steps to Improve the Hiring Process: 

Agencies Appear to Be Making Limited Use of New Hiring Flexibilities: 

Conclusions: 

Agency Comments and Our Evaluation: 

Appendixes: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Summary Results of GAO Survey of Members of the Chief 
Human Capital Officers Council: 

Appendix III: Comments from the Office of Personnel Management: 
Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Acknowledgments: 

Tables Tables: 

Table 1: New Federal Hires by Department or Agency for Fiscal Year 
2003: 

Table 2: Governmentwide and Agency-Specific Direct-Hire Authorities 
Issued by OPM (June 2003 to Present): 

Figures: 

Figure 1: Typical Steps for Filling Competitive Selection Vacancies: 

Figure 2: CHCO Council Members' Responses on the Extent to Which Their 
Agencies Are Using Category Rating: 

Figure 3: CHCO Council Members' Responses on the Most Significant 
Barriers Preventing or Hindering Their Agencies' Use of Category 
Rating: 

Figure 4: CHCO Council Members' Responses on the Extent to Which Their 
Agencies Are Using Direct Hire: 

Figure 5: CHCO Council Members' Responses on the Most Significant 
Barriers Preventing or Hindering Their Agencies' Use of Direct Hire: 

Letter June 7, 2004: 

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

High-performance organizations need dynamic, results-oriented 
workforces with the requisite knowledge and up-to-date skills to 
accomplish their missions and achieve their goals. To acquire such 
workforces, federal agencies must have effective hiring processes so 
that they can compete for talented people in a highly competitive job 
market. Improving the federal hiring process is critical given the 
increasing number of new hires expected in the next few years. In 
fiscal year 2003, the executive branch hired nearly 95,000 new 
employees. Yet, there is widespread recognition that the 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.

In May 2003, we issued a report on several key problems in the federal 
hiring process.[Footnote 1] To help address these problems, we 
recommended that the Office of Personnel Management (OPM) take 
additional actions to assist agencies in strengthening the federal 
hiring process. We also reported that agencies must take responsibility 
for maximizing the efficiency and effectiveness of their hiring 
processes within the current statutory and regulatory framework. You 
asked us to follow up on this report and provide information on (1) the 
status of recent efforts to help improve the federal hiring process and 
(2) the extent to which federal agencies are using new hiring 
flexibilities contained in the Homeland Security Act of 2002--category 
rating and direct-hire authority.[Footnote 2]

To respond to these follow-up issues, we interviewed officials from OPM 
and the interagency Chief Human Capital Officers (CHCO) Council. We 
also administered a questionnaire to the 23 agency members serving on 
the CHCO Council, and all but one responded.[Footnote 3] In addition, 
we collected and reviewed OPM documents related to the federal hiring 
process, and we reviewed data from OPM's central database of 
governmentwide personnel information. We conducted our work in 
accordance with generally accepted government auditing standards. (See 
app. I for additional information on our objectives, scope, and 
methodology and app. II for the complete results of our CHCO Council 
survey.): 

Results in Brief: 

Congress, OPM, and agencies recognize that federal hiring has needed 
reform, and they have undertaken various efforts to do so. In 
particular, Congress has provided agencies with additional hiring 
flexibilities, OPM has taken significant steps to modernize job vacancy 
announcements and develop the government's recruiting Web site, and 
most agencies are continuing to automate parts of their hiring 
processes. Still, problems remain with the job classification process 
regarded by many as antiquated, and there is a need for improved tools 
to assess the qualifications of job candidates. In addition, despite 
agency officials' past calls for hiring reform, agencies appear to be 
making limited use of hiring flexibilities enacted by Congress and 
implemented by OPM almost a year ago that could help agencies in 
expediting and controlling the hiring process.

OPM and agencies are continuing to address the problems with the key 
parts of the federal hiring process we identified in our May 2003 
report. Significant issues and actions being taken include the 
following.

* Reforming the classification system. In our May 2003 report on 
hiring, we reported that many regard the standards and process for 
defining a job and determining pay in the federal government as a key 
hiring problem because they are inflexible, outdated, and not 
applicable to the jobs of today. OPM has revised the classification 
standards of several job series to make them clearer and more relevant 
to current job duties and responsibilities. In addition, as part of the 
effort to create a new personnel system for the Department of Homeland 
Security (DHS), OPM is working with DHS to create broad pay bands for 
the department in place of the 15-grade job classification system that 
is required for much of the rest of the federal civil service. OPM told 
us that its ability to more effectively reform the classification 
process is limited under current law and that legislation is needed to 
modify the current restrictive classification process for the majority 
of federal agencies. Fifteen of the 22 CHCO Council members responding 
to our survey reported that either OPM (10 respondents) or Congress (5 
respondents) should take the lead on reforming the classification 
process, rather than the agencies themselves.

* Improving job announcements and Web postings. In our May 2003 report, 
we noted that the lack of clear and appealing content in federal job 
announcements could hamper or delay the hiring process. OPM has 
continued to move forward on its interagency project to modernize 
federal job vacancy announcements, including providing guidance to 
agencies to improve announcements. In addition, OPM continues to 
collaborate with agencies in implementing Recruitment One-Stop, an 
electronic government initiative that includes the USAJOBS Web site 
(www.usajobs.opm.gov) to assist applicants in finding employment with 
the federal government. All 22 of the CHCO Council members responding 
to our survey reported that their agencies had made efforts to improve 
their job announcements and Web postings. In narrative responses to our 
survey, a CHCO Council member representing a major department said, for 
example, that the USAJOBS Web site is an excellent source for posting 
vacancies and attracting candidates. Another said that the Recruitment 
One-Stop initiative was very timely in developing a single automated 
application for job candidates.

* Automating hiring processes. In our May 2003 report, we conveyed that 
manual processes for rating and ranking job candidates are time 
consuming and delay the federal hiring process. OPM provides to 
agencies on a contract or fee-for-services basis an automated hiring 
system, USA Staffing, which is a Web-enabled software program that 
automates the steps of the hiring process. According to OPM, over 40 
federal organizations have contracted with OPM to use USA Staffing. 
Other federal agencies have relied on private vendors to automate their 
hiring processes. Twenty-one of the 22 CHCO Council members responding 
to our survey reported that their agencies had made efforts to automate 
significant parts of their hiring processes.

* Improving candidate assessment tools. We concluded in our May 2003 
report that key candidate assessment tools used in the federal hiring 
process can be ineffective. We especially noted some of the challenges 
of assessment tools and special hiring programs used for occupations 
covered by the Luevano consent decree.[Footnote 4] Although OPM 
officials said that they monitor the use of assessment tools related to 
positions covered under the Luevano consent decree, they have not 
reevaluated these assessments tools. OPM officials told us, however, 
that they have provided assessment tools or helped develop new 
assessment tools related to various occupations for several agencies on 
a fee-for-service basis. Although OPM officials acknowledged that 
assessment tools in general need to be reviewed, they also noted that 
it is each agency's responsibility to determine what tools it needs to 
assess job candidates. The OPM officials also said that if agencies do 
not want to develop their own assessment tools, then they could request 
that OPM help develop such tools under the reimbursable service program 
that OPM operates. Twenty-one of the 22 CHCO Council members responding 
to our survey reported that their agencies had made efforts to improve 
their hiring assessment tools.

Agencies appear to be making limited use of two new personnel 
flexibilities created by Congress in November 2002 and implemented by 
OPM in June 2003--category rating and direct-hire authority. Data on 
the actual use of these new flexibilities are not readily available, 
but most CHCOs responding to our survey indicated that their agencies 
are making little or no use of either flexibility--a view confirmed by 
OPM officials based on their contacts with agencies. The limited use of 
category rating is somewhat unexpected given the views of human 
resources directors we interviewed 2 years ago. As noted in our May 
2003 report, many agency human resources directors indicated that the 
antiquated method of ranking and referring candidates was one of the 
key obstacles in the hiring process. Category rating was authorized to 
address those concerns. In our survey of CHCO Council members, 21 of 
the 22 respondents cited at least one barrier that they said prevented 
or hindered their agencies from using or making greater use of the new 
hiring flexibilities. Although no one specific barrier was cited by a 
majority of survey respondents for either of the two new hiring 
flexibilities, frequently cited barriers included (1) the lack of OPM 
guidance for using the flexibilities, (2) the lack of agency policies 
and procedures for using the flexibilities, (3) the lack of flexibility 
in OPM rules and regulations, and (4) concern about possible 
inconsistencies in the implementation of the flexibilities within the 
department or agency.

In a separate report we issued in May 2003 on the use of human capital 
flexibilities, we recommended that OPM work with and through the new 
CHCO Council to more thoroughly research, compile, and analyze 
information on the effective and innovative use of human capital 
flexibilities and more fully serve as a clearinghouse in sharing and 
distributing information.[Footnote 5] We noted that sharing information 
about when, where, and how the broad range of flexibilities is being 
used, and should be used, could help agencies meet their human capital 
management challenges. As we recently testified, OPM and agencies need 
to continue to work together to improve the hiring process, and the 
CHCO Council should be a key vehicle for this needed 
collaboration.[Footnote 6] To accomplish this effort, agencies need to 
provide OPM with timely and comprehensive information about their 
experiences in using various approaches and flexibilities to improve 
their hiring processes. OPM--working through the CHCO Council--can, in 
turn, help accomplish this effort by serving as a facilitator in the 
collection and exchange of information about agencies' effective 
practices and successful approaches to improved hiring.

The federal government is now facing one of the most transformational 
changes to the civil service in half a century, which is reflected in 
the new personnel systems for DHS and the Department of Defense (DOD) 
and in new hiring flexibilities provided to all agencies. Today's 
challenge is to define the appropriate roles and day-to-day working 
relationships for OPM and individual agencies as they collaborate on 
developing innovative and more effective hiring systems. Moreover, 
human capital expertise within the agencies must be up to the challenge 
for this transformation to be successful and enduring.

The Director of OPM provided written comments on a draft of this 
report, which are reprinted in appendix III. In her written comments, 
the OPM Director said that OPM has done much to assist agencies to 
improve hiring and increase agency officials' knowledge about hiring 
flexibilities available to them, and she highlighted various examples 
of OPM's efforts in this regard. She also stressed that agencies must 
rise to the challenge, provide consistent leadership at the senior 
level, take advantage of the training opportunities offered by OPM, and 
make fixing the hiring process a priority. The OPM Director also 
commented that the report "appears to rely upon perceptions that are 
not consistent with the facts." In technical comments, OPM explained 
that this concern related to the reporting of various narrative 
responses from our survey of CHCO Council members. We disagreed with 
OPM's contention that such officials are not knowledgeable enough to 
comment on the issues we raised in our questionnaire. Additional 
information on OPM's comments and our evaluation of those comments is 
presented at the end of this report. Where appropriate, we made changes 
to the report to address the comments we received.

Background: 

Federal civil service employees, other than those in the Senior 
Executive Service, are employed in either the competitive service or 
the excepted service.[Footnote 7] The competitive service examination 
process is one of the processes intended to ensure that agencies' 
hiring activities comply with merit principles. In January 1996, OPM 
delegated examining authority to federal agencies for virtually all 
positions in the competitive service. Under delegated examining 
authority, agencies 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. 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.

The federal hiring process involves 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. Figure 1 shows the typical steps for filling vacancies 
through the competitive examining process.

Figure 1: Typical Steps for Filling Competitive Selection Vacancies: 

[See PDF for image] 

[End of figure] 

The Homeland Security Act of 2002 contained new hiring flexibilities 
that could help agencies in expediting and controlling their hiring 
processes--category rating and direct-hire authority. Category rating 
is an alternative rating and selection procedure that can expand the 
pool of qualified job candidates from which agency managers may select. 
Under this procedure, an agency manager can select any job candidate 
placed in a best-qualified category rather than being limited to three 
candidates under the "rule of three." Direct-hire authority allows an 
agency to appoint individuals to positions without adherence to certain 
competitive examination requirements when OPM determines that there is 
a severe shortage of candidates or a critical hiring need. 
Specifically, when making appointments under the newly authorized 
direct-hire authority, agencies still are required to provide public 
notice of the job vacancies and screen all applicants to ensure that 
they meet the basic qualification requirements of the position; 
however, agencies are not required to numerically rate and rank 
candidates nor apply the rule of three or veterans' preference.

The act also established a CHCO position in 24 federal agencies to 
advise and assist the head of each agency and other agency officials in 
their strategic human capital management efforts.[Footnote 8] 
Additionally, the act created a CHCO Council to advise and coordinate 
these activities among the agencies. In accordance with the act, 
members of the CHCO Council include the Director of OPM, the Deputy 
Director for Management at the Office of Management and Budget (OMB), 
the CHCOs from executive departments, and additional agency members 
designated by the OPM Director. The functions of the CHCO Council are 
to offer advice and coordinate agencies' activities concerning 
modernization of human resources systems, improving the quality of 
human resources information, and giving concerted attention to 
legislation affecting human resources operations. The CHCO Council 
currently has five subcommittees that help carry out its work, 
including a subcommittee on the hiring process.[Footnote 9] The purpose 
of the hiring subcommittee is to identify actions it or the CHCO 
Council could take to improve recruiting and hiring in the federal 
government.

Since the mid-1990s, the number of new federal hires increased 
considerably--increasing from about 50,000 employees in 1996 to over 
143,000 employees in 2002. Federal hiring in the mid-1990s declined 
because many agencies were downsizing and did not need to fill 
positions. Increasingly, agencies began hiring new employees, 
particularly because of a slowdown in downsizing and growing numbers of 
employees retiring. In fiscal year 2003, the largest federal hirer was 
DOD, which brought on board more than one-third of all hires. The 
number of federal hires decreased in 2003 over 2002, which was 
primarily because of the hiring of nearly 35,000 airport screeners in 
2002 into the newly created Transportation Security Administration. 
Table 1 shows the number of new federal hires by department or agency 
for fiscal year 2003.

Table 1: New Federal Hires by Department or Agency for Fiscal Year 
2003: 

Department or agency: Department of Defense; 
Competitive service: 22,764; 
Excepted service: 12,525; 
Total: 35,289.

Department or agency: Department of Veterans Affairs; 
Competitive service: 8,910; 
Excepted service: 5,902; 
Total: 14,812.

Department or agency: Department of the Treasury; 
Competitive service: 8,038; 
Excepted service: 527; 
Total: 8,565.

Department or agency: Department of Homeland Security; 
Competitive service: 4,220; 
Excepted service: 1,636; 
Total: 5,856.

Department or agency: Department of Justice; 
Competitive service: 4,739; 
Excepted service: 1,010; 
Total: 5,749.

Department or agency: Department of Agriculture; 
Competitive service: 3,505; 
Excepted service: 847; 
Total: 4,352.

Department or agency: Social Security Administration; 
Competitive service: 1,897; 
Excepted service: 2,411; 
Total: 4,308.

Department or agency: Department of Transportation; 
Competitive service: 499; 
Excepted service: 2,284; 
Total: 2,783.

Department or agency: Department of Interior; 
Competitive service: 1,818; 
Excepted service: 688; 
Total: 2,506.

Department or agency: Department of Health and Human Services; 
Competitive service: 1,761; 
Excepted service: 722; 
Total: 2,483.

Department or agency: Department of Commerce; 
Competitive service: 1,255; 
Excepted service: 226; 
Total: 1,481.

Department or agency: All others; 
Competitive service: 4,166; 
Excepted service: 2,640; 
Total: 6,806.

Total; 
Competitive service: 63,572; 
Excepted service: 31,418; 
Total: 94,990. 

Source: OPM Central Personnel Data File.

[End of table]

Previous Work by GAO and Others Has Identified Key Problem Areas in the 
Competitive Hiring Process: 

Within government and the private sector, it has been widely recognized 
that the federal hiring process is lengthy and cumbersome and hampers 
agencies' ability to hire the high-quality people they need to achieve 
their agency goals and missions. Numerous studies and research over the 
past decade by OPM, the Merit Systems Protection Board (MSPB), the 
National Academy of Public Administration (NAPA), the Partnership for 
Public Service, the National Commission on the Public Service, and GAO 
have noted concerns and problems with the federal hiring process, as 
the following examples illustrate.

* In October 2001, the Partnership for Public Service released the 
results of a poll it had commissioned that found "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 10]

* 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 11]

* 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 12]

* 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 13]

* 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 14]

Our May 2003 report on federal hiring summarized these concerns and 
added further evidence to confirm many of the problems and issues that 
have been identified over the past decade. As many of these and other 
studies have noted, and as many human resources directors pointed out 
in our prior interviews, nearly all parts of the competitive hiring 
process hamper effective and efficient federal hiring. Key problem 
areas identified in our May 2003 report included 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.

As noted previously, our prior work surveying human resources 
directors, along with the work of others, indicated that the time-to-
hire is too long for most federal hires. Comprehensive department or 
governmentwide data on time-to-hire are often not available; however, 
in fiscal year 2002, OPM compiled and analyzed data on time-to-hire and 
found that it typically took on average about 102 days for agencies to 
fill a vacancy using the competitive process. At that time, OPM 
measured time-to-hire from the period between when the request to hire 
or fill a position was received in the human resources 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. OPM officials told us 
that better data are not available on time-to-hire and that they are 
surveying federal agencies to assess how to gather systematic data on 
time-to-hire.

OPM and Agencies Are Taking Steps to Improve the Hiring Process: 

OPM and agencies are continuing to focus on the problems with the 
federal hiring process we identified in our May 2003 report. OPM has 
taken actions to address federal hiring across the board and for 
specific parts of the hiring process. For example, in February of this 
year, the Director of OPM issued a memorandum to the CHCOs of federal 
agencies offering 10 ways that agencies can immediately improve their 
hiring processes using authorities they already possess. Steps outlined 
in this memo include fully engaging the agency's human resources staff 
and offering recruiting incentives such as recruitment bonuses, 
relocation expenses, and student loan repayments. In addition, to 
encourage agencies to improve their hiring processes, OPM is urging 
agencies to implement a new 45-day hiring model, which measures the 
time-to-hire period from the date the vacancy announcement closes to 
the date a job offer is extended. OPM officials said they would work 
closely with agencies to deploy all appropriate flexibilities to meet 
this goal. According to OPM, agencies will be scored under the Human 
Capital Initiative of the President's Management Agenda on their 
progress toward reducing time-to-hire. In addition, OPM is 
administering a survey of CHCOs on agency hiring practices to identify 
opportunities to use the flexibilities strategically, eliminate 
remaining outmoded practices, and generally expedite the hiring 
process.

OPM and agencies have also taken actions to address various key parts 
of the federal hiring process. These parts, which are discussed in this 
section, include reforming the classification system, improving job 
announcements and Web postings, automating hiring processes, and 
improving candidate assessment tools. Our May 2003 report on federal 
hiring outlined recommendations to OPM dealing with these key parts of 
the hiring process. While OPM has placed concerted attention on three 
of these key parts of the hiring process, focused attention and action 
by OPM to improve assessment tools, as we recommended in our May 2003 
report, could further help agencies in identifying the best candidates 
for federal jobs.

Reforming the Classification System Could Better Facilitate Filling 
Positions with the Right Employees: 

We previously reported the conclusion of many that the standards and 
process for defining a job and determining pay in the federal 
government are a key hiring problem because they are inflexible, 
outdated, and not applicable to the jobs of today. The classification 
system is intended to categorize jobs or positions according to the 
kind of work done, the level of difficulty and responsibility, and the 
qualifications required for the position, and is to serve as a building 
block to determine the pay for the position. Generally, defining a job 
and setting pay in the federal government must be based on standards in 
the Classification Act of 1949, which sets out 15 grade levels of the 
General Schedule (GS) expressed in terms of the difficulty and level of 
responsibility for each specific position.[Footnote 15] The federal 
classification process and standard job classifications were generally 
developed decades ago when typical jobs were more narrowly defined and 
often clerical or administrative in nature. However, jobs in today's 
knowledge-based organizations often 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 federal occupations. According 
to a recent OPM study, a key problem with federal job classification is 
that, under present rules, characteristics such as workload, quality of 
work, and results are not classification factors that can affect the 
overall level of basic pay for a position.[Footnote 16] Given this 
limitation, the resulting job classifications and related pay might 
hamper efforts to fill the positions with the right employees.

Our May 2003 report noted some actions that OPM and agencies had taken 
to address the federal job classification process. For example, we 
reported that some agencies had automated their complicated 
classification processes to reduce the time it takes to carry out this 
task. The Department of the Army, for instance, created a centralized 
database that gives human resources managers at Army access to active 
position descriptions and position-related information to help in 
classifying jobs. In addition, we noted that OPM had 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. At that time, OPM pointed 
out that the classification standards and process needed to be reformed 
and that changes to the Classification Act of 1949 were needed to make 
fundamental changes to how jobs are defined and pay is set. Our report 
noted, however, that OPM recognized the need to maintain the GS system 
in the absence of an alternative and well-managed transition to a new 
system.

In our May 2003 report, we also recommended that OPM study how to 
improve, streamline, and reform the classification process. In response 
to our questions about the status of OPM's actions on this 
recommendation, OPM said that it has recently taken several actions to 
address the job classification process. OPM stated that most 
classification standards are being issued as "job family" standards, 
which OPM said allows it to study related occupations together to 
identify both commonalities and differences. OPM also said that it is 
working closely with agencies to ensure that classification standards 
reflect the current nature of federal work. OPM noted, for example, 
that it is working with a number of agencies to develop a new job 
family standard for administrative work in the occupational series 
covering investigative work. In addition, OPM said that it is exploring 
an integrated approach to classification and qualification standards. 
By integrating these two functions into a single occupational standard, 
OPM hopes to make more clear the link between the work conducted in an 
occupation, the competencies required to perform that work, and the 
requirements that individuals must demonstrate to be placed into these 
positions. OPM believes an integrated approach for classification and 
qualifications standards will improve the quality of the federal 
workforce through competency-based qualifications that identify the 
full range needed for successful job performance. This new approach 
thus could better enable federal agencies to hire the right person at 
the right time.

OPM also recently collaborated with DHS to help reform its personnel 
system. The Homeland Security Act, which created DHS, provided it with 
significant flexibility to design a modern human capital system. 
Specifically, DHS may deviate from the classification and most pay rate 
requirements contained in Title 5 of the U.S. Code.[Footnote 17] Under 
proposed regulations, DHS would create broad pay bands for much of the 
department in place of the 15-grade GS system now in place for much of 
the civil service. Several OPM-sponsored demonstration projects over 
the past 20 years have demonstrated the efficacy of pay banding systems 
that were similar to the system being proposed by DHS.[Footnote 18] 
Last September, we reported that DHS's process for designing its new 
human capital system involved significant collaboration with OPM and 
generally reflected the important elements of a successful 
transformation, including effective communication and employee 
involvement.[Footnote 19] A new OPM initiative is to collaborate with 
DOD as that department also develops and implements its new personnel 
system--the National Security Personnel System.[Footnote 20] In 
testimony earlier this year, we stressed that DOD could benefit from 
employing a collaborative and inclusive process similar to that used by 
DHS.[Footnote 21]

Additionally, in April 2004, OPM released a draft publication entitled 
OPM's Guiding Principles for Civil Service Transformation, which, as 
its title suggests, proposes a set of principles for reshaping the 
civil service system.[Footnote 22] In this draft document, OPM states 
that the modernization of the federal job classification process should 
begin with governmentwide legislation that mirrors the flexibilities 
provided to DHS and DOD. OPM also indicates that reform in the areas of 
pay and performance management systems should be a top priority, and 
that if agencies governmentwide do not receive reforms similar to those 
that DHS and DOD have received in this area, agencies risk being at a 
competitive disadvantage in recruiting a talented workforce. 
Furthermore, OPM's draft document suggests that there is no need for 
further testing of pay-for-performance approaches in the federal 
government and that it is now time to extend the DHS and DOD pay-for-
performance frameworks to other agencies that are ready to modernize 
their human resources systems.

Views of the CHCO Council Members: 

In our April 2004 survey of the members of the CHCO Council, 13 of the 
22 respondents said that they were aware of efforts that OPM has made 
to reform the federal classification process (see app. II for further 
information). In narrative responses to our survey questions relating 
to job classification, one CHCO Council member representing a large 
department, for example, recognized OPM's work to develop job family 
standards. Conversely, a Council member representing an independent 
agency said he was not aware of any significant OPM-led reforms related 
to classification. For those respondents who said they were aware of 
any OPM efforts to reform the classification process, we also asked 
about the extent to which OPM's efforts had helped their agencies and 
about their level of satisfaction or dissatisfaction with such OPM 
efforts and related proposals. In narrative responses to our survey 
questions, a CHCO Council member representing a large department said, 
for example, that OPM had relinquished any responsibility for reforming 
the process and that it has been up to Congress to legislate reforms 
for specific agencies. Another respondent said that OPM is making 
modest progress to change the classification process within the purview 
of its authority but that changes to existing law are necessary for 
real reform to occur.

We also asked the CHCO Council members for their views about who should 
currently take the lead in furthering reform of the classification 
process in the federal government. Fifteen of the 22 CHCO Council 
members responding to our survey reported that either OPM (10 
respondents) or Congress (5 respondents) should take the lead on 
reforming the classification process, rather than the agencies 
themselves. In narrative responses to our survey questions, one Council 
member representing a major department said, for example, that CHCOs 
should be closely involved in this effort and that OPM's efforts could 
be improved with the input and shared responsibility of the agencies. 
Another respondent encouraged Congress to pass legislation granting 
other agencies still under Title 5 rules a comparable degree of 
flexibility to that provided to DHS, DOD, and other agencies given 
authority for personnel reform. Another Council member representing a 
department suggested that any reform effort on the part of OPM or 
others should focus on linking true classification reform and pay for 
performance. Another respondent said that an independent group or task 
force should take the lead in furthering reform of the classification 
process.

Status of Our Prior Recommendation to OPM: 

OPM has implemented the recommendation that we made in last year's 
report for OPM to study how to improve, streamline, and reform the 
classification process. The draft Guiding Principles for Civil Service 
Transformation document released by OPM in April lays out some 
significant proposals for changes to the civil service system, which 
encompasses issues related to job classification. OPM told us that when 
drawing conclusions about OPM's efforts to reform the job 
classification process, it is important to recognize OPM's limited 
latitude under current statute. OPM pointed out that it does not have 
the option of accommodating the persistent broadening of work levels 
that has occurred in organizations throughout the post-industrial 
workplace by establishing standards that reflect fewer, broader levels 
of work. OPM has noted that its ability to more effectively reform the 
classification process is limited under current law and that 
legislation is needed to modify the current restrictive classification 
process for the majority of federal agencies. OPM officials said that 
they must maintain the 15-grade GS system and make it possible for 
agencies to classify their GS positions reliably according to law in as 
straightforward a manner as possible.

Improved Job Announcements and Web Postings Can Serve as Better 
Recruiting Tools: 

In our May 2003 report, we noted that the lack of clear and appealing 
content in federal job announcements can hamper or delay the hiring 
process. During the work for that report, our interviews with several 
agency human resources directors revealed that federal 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. We cited reports[Footnote 23] from 
MSPB that said vacancy announcements often 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. MSPB also said that some job 
announcements were lengthy and difficult to read online, contained 
jargon and acronyms, and appeared to be written for people already 
employed by the government. MSPB further noted that many of the 
announcements it reviewed did not include information on retirement and 
other benefits, such as vacation time and medical and health insurance, 
which might entice people to apply. As we pointed out in our previous 
report, making vacancy announcements more visually appealing, 
informative, and easy to access and navigate could make them much more 
effective as recruiting tools.

Prior to the issuance of our last report on federal hiring, OPM had 
initiated some actions to help make job announcements easier to access 
and understand. OPM initiated an interagency project to modernize 
federal job vacancy announcements, including providing guidance to 
agencies to improve announcements. OPM also worked to obtain contractor 
support to enhance its USAJOBS Web site with the goals of making it 
easier and quicker for people to find federal jobs and enhancing the 
site's "eye-catching" appeal. This effort is part of the Recruitment 
One-Stop initiative, which, as the name implies, would provide a one-
stop Web site for federal job seekers by implementing a single 
application point that includes vacancy information, job application 
submission, application status tracking, employment eligibility 
screening, and applicant database mining.

More recently, OPM also has taken additional steps to make job 
announcements and Web postings more user friendly and effective. In 
August 2003, OPM revamped the USAJOBS Web site to feature a quicker 
job-search engine, sorting capabilities, and accessibility for disabled 
users. Other new features included allowing applicants to create and 
save application letters and store up to five resumes online as well as 
making posted resumes searchable by agency recruiters. In an effort to 
centralize and streamline the process, OPM had also originally proposed 
to have executive branch agencies shut down their agency-unique job 
search engines and resume builders. This raised concerns by competing 
private vendors offering their own recruitment and hiring software to 
agencies. According to OPM, in response to these concerns, it informed 
agencies that they were free to adopt any online recruiting and hiring 
system they wish as long as the system eventually was integrated with 
the governmentwide online recruitment system.[Footnote 24]

In March, we reported on the progress of various electronic government 
initiatives, including the OPM-led Recruitment One-Stop 
initiative.[Footnote 25] We noted OPM's goal to increase customer 
satisfaction with the federal application process through Recruitment 
One-Stop. According to OPM, the customer satisfaction rating[Footnote 
26] for the USAJOBS Web site had increased from a score of 68 on 
December 15, 2003, to a score 75.5 as of May 14, 2004. We also reported 
that a resume-mining tool to identify candidates had been implemented 
as part of the Web site but the tool had not been widely used to date. 
OPM told us that the addition of the resume-mining tool was one of many 
recent changes to the USAJOBS Web site and OPM had not yet fully 
trained agencies on the use of this tool. Nevertheless, according to 
OPM, since launching the new USAJOBS technology in August 2003, more 
than 500,000 new resumes have been created and over 325,000 of the 
resumes are searchable. OPM reported that anecdotal information 
received from agencies using the resume-mining tool was very 
encouraging. For example, one agency reported to OPM that it had 
identified excellent job candidates using the resume-mining tool and 
had recently hired an employee using this feature.

Views of the CHCO Council Members: 

In our April 2004 survey of the members of the CHCO Council, all of the 
22 respondents said that their agencies had made efforts to improve 
their job announcements and Web postings. Our survey also asked the 
CHCO Council members about the extent to which OPM had assisted their 
agencies in improving job announcements and Web postings and their 
level of satisfaction or dissatisfaction with that assistance (see app. 
II for further information). In narrative responses to our survey 
questions on improving job announcements and Web postings, a CHCO 
Council member representing a major department said, for example, that 
the USAJOBS Web site is an excellent source for posting vacancies and 
attracting candidates. Another respondent said that the Recruitment 
One-Stop initiative was very timely in developing a single automated 
application for job candidates. Another commented that OPM has 
encouraged agency participation in revamping the vacancy announcement 
text and in usability testing of the Recruitment One-Stop site. A 
Council member representing a major department added that OPM's 
continued support is needed in providing guidance and templates to 
agencies on streamlined, easy-to-understand language for job postings. 
Overall, more survey respondents reported some degree of satisfaction 
with OPM's assistance in improving job announcements and Web postings 
than on any other part of the hiring process that we surveyed.

Status of Our Prior Recommendation to OPM: 

OPM has implemented the recommendation that we made in last year's 
report for OPM to continue to assist agencies in making job 
announcements and Web postings more user friendly and effective. OPM's 
efforts in this area are demonstrated by the CHCO Council members' 
relative level of satisfaction with OPM's assistance in improving job 
announcements and Web postings compared to other parts of the hiring 
process that we surveyed. Nonetheless, OPM told us that agencies 
themselves have the front-line responsibility for improving the content 
of their own job announcements. OPM suggested that agencies assign an 
individual to review and modify their job announcements to make their 
postings understandable and more interesting to potential job 
candidates.

Automation Could Help to Streamline Agencies' Hiring Processes: 

In our May 2003 report, we reported that manual processes for rating 
and ranking candidates are time consuming and delay the federal hiring 
process. Prior to assessing applicants based on their relative merits, 
agencies must conduct a screening process to determine if applicants 
meet eligibility requirements (such as U.S. citizenship) and the basic 
or minimum education or work experience qualifications that OPM 
established for such a position. As we reported, in a manual hiring 
system, human resources staff would have to review all the applications 
and document why an applicant did or did not meet minimum 
qualifications. If there is a large number of applicants, carrying out 
this process can be time consuming. We also pointed out that once the 
applicants' eligibilities are 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. 
Some of the delay in convening the assessment panels is due to 
assembling the appropriate managers and subject matter experts, 
coordinating their availability, and factoring in the exigencies of 
other demands. Once 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.

The use of automation for agency hiring processes has various potential 
benefits, including eliminating the need for volumes of paper records, 
allowing fewer individuals to review and process job applications, and 
reducing the overall time-to-hire. Automation can facilitate almost 
every step of the federal hiring process. For example, an automated 
hiring system could electronically determine if an applicant met the 
basic qualifications and electronically provide timely notification to 
the applicant of the status of his or her application. Automation could 
also streamline the process by electronically rating and ranking 
applicants, or placing them in quality categories, eliminating the need 
to form panels to assess the applicants. In addition, automated systems 
typically create records of actions taken so that managers and human 
capital staff can easily document their decisions related to hiring. 
Nonetheless, agencies need to recognize the importance of careful 
planning and implementation when automating their hiring processes. As 
we have previously reported, agencies should first validate their 
requirements and look at reengineering their administrative processes 
before developing any information systems to support their 
processes.[Footnote 27]

In our May 2003 report, we related that OPM had taken some actions to 
help agencies automate and streamline their hiring processes. OPM 
developed an automated hiring system, called USA Staffing, which 
federal agencies may purchase from OPM. USA Staffing is a Web-enabled 
software program that automates the steps of the hiring process, 
including recruitment, assessment, referral, and applicant 
notification. Beginning in September of 2000, OPM invited human 
resources officials from federal agencies to OPM-sponsored USA Staffing 
demonstrations, where human resources officials could learn about the 
advantages of using USA Staffing. According to OPM, over 40 federal 
organizations have contracted with OPM to use USA Staffing. Other 
federal agencies have relied on private vendors to automate their 
hiring processes.

Views of the CHCO Council Members: 

In our April 2004 survey of the members of the CHCO Council, 21 of 22 
respondents said that their agencies had made efforts to automate 
significant parts of their hiring processes. For those responding that 
they had made such efforts, we also asked about the extent to which OPM 
had assisted their agencies in automating their hiring processes and 
their level of satisfaction or dissatisfaction with that assistance 
(see app. II for further information). In narrative responses to our 
survey questions about automating hiring processes, one Council member 
representing a cabinet-level department concurred with OPM's current 
approach to support third-party vendors who can provide robust and 
streamlined rating and ranking systems that complement and supplement 
the Recruitment One-Stop. Another Council member said that current OPM 
policy or regulations that impede the automation of the federal hiring 
process should be streamlined and simplified for both the applicant and 
human resources practitioner. Other comments included the following.

* Individual departments and agencies should manage the automation 
process themselves, even though not all agencies have comparable 
information technology (IT) infrastructures.

* Agencies should decide how to best accomplish automation of their 
hiring processes instead of forcing integration into one system.

* OPM and the departments and agencies have a shared responsibility for 
automation of hiring processes.

Status of Our Prior Recommendation to OPM: 

OPM has implemented the recommendation that we made in last year's 
report for OPM to assist agencies in automating their hiring processes. 
OPM has continued to promote the use of automated systems, including 
USA Staffing and customer systems to meet agency needs. OPM's efforts 
in this area are demonstrated by its work in providing services to over 
40 federal organizations that have contracted with OPM to use USA 
Staffing. OPM officials said that OPM has developed and would soon 
implement a new Web-based version of USA Staffing, which would link and 
automate the recruitment, examining, referral, notification, and hiring 
processes.

Improved Assessment Tools Could Help Agencies in Identifying the Best 
Candidates for Jobs: 

In our May 2003 report, we concluded that key candidate assessment 
tools used in the federal hiring process can be ineffective. Agencies 
can use various approaches to assess job candidates under the federal 
merit-based hiring process. These applicant assessment tools include 
written and performance tests, manual and automated techniques to 
review each applicant's training and experience, as well as 
interviewing approaches and reference checks. Using the right 
assessment tool, or combination of tools, can assist the agency in 
predicting the relative success of each applicant on the job and 
selecting the relatively best person for the job.

Our May 2003 report particularly discussed the ineffectiveness of 
candidate assessment tools associated with filling occupations covered 
by the Luevano consent decree. We noted that the Administrative Careers 
with America (ACWA) self-rating examination that is used to 
competitively fill most positions covered by the Luevano consent decree 
was cumbersome, delayed hiring, and often did not provide quality 
candidates. This ACWA rating-schedule examination contains 157 
multiple-choice questions that are designed to distinguish among 
qualified applicants on the basis of their self-rated education and 
life experience. In our May 2003 report, we noted that many agencies 
reported that the primary reason they did not use the ACWA examination 
was their past experiences with the quality of the candidates. For 
positions that are not covered by the Luevano consent decree, agencies 
typically examine candidates by rating and ranking them based on 
experience, training, and education, instead of administering tests.

Our May 2003 report also discussed the challenges associated with the 
special hiring programs established under the consent decree--
Outstanding Scholar and Bilingual/Bicultural. Many agency human 
resources officials we interviewed for our May 2003 report said the 
Outstanding Scholar program was a quick way to hire high-quality 
college graduates for positions covered by the Luevano consent decree 
without using the complex OPM examination process. However, OPM and 
MSPB have commented that this is an inappropriate use of the authority. 
Outstanding Scholar allows candidates who meet the eligibility 
criteria--baccalaureate grade point average and class standing--to be 
directly appointed without competition. According to MSPB, such 
criteria are questionable predictors of future performance, and they 
deny consideration to many qualified applicants. For similar reasons, 
MSPB also has concerns about the Bilingual/Bicultural program, which 
permits agencies to directly hire applicants who obtained a passing 
examination score, without further regard to rank, when the position 
needs to be filled by an incumbent with bilingual or bicultural skills 
and the applicant has the requisite job skills. MSPB has recommended 
abolishing both the Outstanding Scholar and Bilingual/Bicultural 
programs because they are not merit based and because other competitive 
hiring methods have been more effective in hiring minorities.

In general, both OPM and MSPB are concerned about the validity of 
candidate assessment tools for all occupations and advocate that 
agencies improve their assessment instruments. OPM told us that because 
of budget constraints, it has only been able to develop assessments on 
a reimbursable basis when other agencies provide OPM with the needed 
resources. OPM also said that many agencies do not have the technical 
expertise, funding, or time to develop valid assessment tools. 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.

Given the problems with these key candidate assessment tools and 
special hiring authorities for Luevano-covered positions, we 
recommended in our May 2003 report that OPM review the effectiveness of 
the Outstanding Scholar and Bilingual/Bicultural Luevano consent decree 
hiring authorities. As we noted in our report, OPM recognized that it 
needed to do more overall to improve candidate 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. Since the 
issuance of our report last year, OPM told us that, as part of the 
consent decree, it collects data annually on how agencies used the 
Outstanding Scholar hiring authority; however, OPM has not reevaluated 
assessment tools related to Luevano-covered positions. OPM acknowledged 
that assessment tools in general need to be reviewed, but commented 
that it is primarily the agency's responsibility to address these 
issues and recommended that agencies perhaps form consortia to improve 
their assessment tools. OPM officials noted that several agencies, such 
as the Immigration and Naturalization Service and the U.S. Customs 
Service, created their own assessment tools for Luevano 
positions.[Footnote 28] OPM officials also said that if agencies do not 
want to develop their own assessment tools, then they could request 
that OPM help develop such tools under the reimbursable service program 
that OPM operates.

In technical comments to our draft report, OPM stated that the ACWA 
rating schedules are valid assessments that have been approved by the 
Department of Justice and that meet professional and legal requirements 
for test development and validation. OPM added that it has efforts 
underway to automate the ACWA system as the second phase of its 
Recruitment One-Stop initiative. Nonetheless, many agency human 
resources officials that we interviewed for our previous work on 
federal hiring told us that the ACWA rating schedule was cumbersome, 
delayed hiring, and often did not provide quality candidates. Thus, 
although the ACWA rating schedule might meet legal and test-development 
requirements, it does not appear to effectively meet the needs of many 
agency human capital officials in their efforts to readily identify and 
quickly hire high-quality job applicants.

Views of the CHCO Council Members: 

In our April 2004 survey of the members of the CHCO Council, 21 of the 
22 respondents said that their agencies had made efforts to improve 
their hiring assessment tools. For those responding that they had made 
such efforts, we also asked about the extent to which OPM had assisted 
their agencies in developing improved hiring assessment tools and their 
level of satisfaction or dissatisfaction with that assistance (see app. 
II for further information). In narrative responses to our survey 
questions on improving assessment tools, a Council member representing 
a cabinet-level department said, for example, that the department has 
used OPM's reimbursable service to develop occupation-specific 
assessment tools with good success. A respondent representing another 
department said OPM should tackle the ACWA assessment tool for hiring 
into occupations covered by the Luevano consent decree, because the 
assessment tool places far too much emphasis on experience at the 
expense of education and potential. According to another Council 
member, departments and agencies are fully competent to procure or 
develop assessment tools, and no additional OPM policy or regulation is 
necessary for the improvement of such tools. Other members made the 
following comments.

* OPM is best positioned to take the lead in improving assessment tools 
for jobs that are common across the government.

* OPM should take the lead governmentwide for the development of 
improved assessment tools, but agencies should take the lead for their 
own agency efforts.

* Both OPM and the departments and agencies have responsibility for 
developing assessment tools.

* Although OPM should not mandate specific assessment tools, as the 
federal human resources expert, OPM should take a strong role in 
providing information, assessments, analyses, and suggestions for 
agencies in using automated tools to assess job applicants.

Status of Our Prior Recommendations to OPM: 

OPM officials told us that they believe OPM has implemented the 
recommendation that we made in last year's report for OPM to develop 
and help agencies develop improved hiring assessment tools. OPM 
officials also told us that OPM has implemented another recommendation 
we made in last year's report for OPM to review the effectiveness of 
the Outstanding Scholar and Bilingual/Bicultural Luevano consent decree 
hiring authorities. Although we agree that OPM has provided assistance 
to agencies in improving their candidate assessment tools and has 
collected information on agencies' use of the special hiring 
authorities, major challenges remain in this area, particularly with 
the continued use of the ACWA exam. OPM needs to take further action to 
address these recommendations, such as actively working to link up 
agencies having similar occupations so that they could potentially form 
consortia to develop more reliable and valid tools to assess job 
candidates.

Our Prior Recommendation on Enhancing the Use of Human Capital 
Flexibilities in the Federal Government: 

We have reported that agencies need to streamline and improve their 
administrative processes for using flexibilities and review self-
imposed constraints that may be excessively process oriented. In our 
December 2002 report on the effective use of human capital 
flexibilities, we reported that some of the barriers to effective 
strategic human capital management in the federal government do not 
stem from law or regulation but are self-imposed by agencies.[Footnote 
29] We noted, for example, that the source of these barriers can 
sometimes be agencies' lack of understanding on the prerogatives that 
they have. Clearly, as we have previously reported, agencies need to 
become better informed about the human capital tools and flexibilities 
available to them and make better use of them than they have in the 
past. Agencies need to learn more about what is being done in the human 
capital area by agencies that have taken the initiative--which 
approaches have worked, which have not, and what lessons can be drawn 
from others' experiences and used to improve their organizations' 
approaches to managing their human capital.

This process is where OPM can also play an important role. In a 
separate report we issued in May 2003 on how OPM can better assist 
agencies in using personnel flexibilities, we recommended that OPM work 
with and through the CHCO Council to more thoroughly research, compile, 
and analyze information on the effective and innovative use of human 
capital flexibilities, including those related to federal 
hiring.[Footnote 30] We noted that this should involve more fully 
serving as a clearinghouse in sharing and distributing information 
about when, where, and how flexibilities are being used, and should be 
used, to help agencies meet their human capital management needs. As we 
recently testified, OPM and agencies need to continue to work together 
to improve the hiring process, and the CHCO: 

Council should be a key vehicle for this needed collaboration.[Footnote 
31] To accomplish this effort, agencies need to provide OPM with timely 
and comprehensive information about their experiences in using various 
approaches and flexibilities to improve their hiring processes. OPM--
working through the CHCO Council--can, in turn, help accomplish this 
effort by serving as a facilitator in the collection and exchange of 
information about agencies' effective practices and successful 
approaches to improved hiring.

Agencies Appear to Be Making Limited Use of New Hiring Flexibilities: 

On the basis of our interviews with OPM officials and the responses to 
our survey of CHCO Council members, federal agencies appear to be 
making limited use of category rating and direct-hire authority, two 
new hiring flexibilities authorized by the Homeland Security Act of 
2002. Data on the actual use of these two hiring flexibilities are not 
readily available, partly because of the recency of their 
authorization. OPM officials we met with expressed the OPM Director's 
frustration that agencies are not attempting to use the flexibilities 
that OPM worked to have written into law for agencies' use. Our survey 
of CHCO Council members confirmed the view that agencies are not making 
extensive use of new flexibilities. Also, 21 of the 22 survey 
respondents cited at least one barrier that they said prevented or 
hindered their agencies from using or making greater use of the new 
hiring flexibilities. Some of the barriers they identified included (1) 
the lack of OPM guidance for using the flexibilities, (2) the lack of 
agency policies and procedures for using the flexibilities, (3) the 
lack of flexibility in OPM rules and regulations, and (4) concern about 
possible inconsistencies in the implementation of the flexibilities 
within the department or agency. OPM officials said that they believe 
the primary reason agencies are not using these new flexibilities is 
that agency officials are unfamiliar with them and do not have 
sufficient knowledge and skills related to these flexibilities to 
maximize their use. OPM officials said that OPM provided agencies with 
guidance for using the flexibilities, such as training sessions at 
recruitment fairs and procedures in the OPM Delegated Examining 
Operations Handbook.

Use of Category Rating Could Provide Agencies with a Larger Pool of 
High-Quality Candidates from Which to Select: 

Category rating is an alternative rating and selection procedure that 
can provide agency managers will a larger pool of qualified job 
candidates from which to select than numerical ranking and the rule of 
three, while also protecting veterans' preference. Under category 
rating, job candidates are assigned to quality categories--such as 
"best qualified" or "highly qualified"--following an assessment of 
their knowledge and skills against job-related criteria. The names of 
all candidates in the highest quality group are then sent to the 
selecting official and are available for selection. If the highest 
quality group contains a veteran, the veteran must be hired unless an 
objection to hiring the veteran is sustained by OPM.[Footnote 32] If 
the number of candidates falling into the highest quality group is 
inadequate, applicants from the next highest quality group of eligible 
candidates can also be referred to the agency manager for selection.

In our May 2003 report on hiring, we pointed out that among several 
candidate-assessment-related issues, one of the largest obstacles in 
the federal hiring process was the rule of three and numerical rating 
system that limited managers' choice of quality candidates. Our report 
noted that many of the human resources directors we interviewed from 
the 24 largest federal agencies raised concerns that the rule of three 
and numerical rating had a negative impact on hiring high-quality 
people. Under procedures using the rule of three, once the assessment 
panel has rated the candidates, the agency's human resources office 
applies applicable veterans' preference points, ranks candidates, and 
refers a sufficient number of candidates to permit the selecting 
official 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. 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.

Over the past decade, the use of category rating procedures to assess 
job applicants was tested in selected agencies through an OPM-sponsored 
demonstration project and was generally found to be an effective rating 
approach.[Footnote 33] As we noted in our May 2003 report, the 
Department of Agriculture's Agricultural Research Service (ARS) and 
Forest Service (FS) tested and implemented category rating in lieu of 
numerical ranking and the rule of three under such a 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. Also, a higher percentage 
of veterans were hired in ARS and about the same percentage of veterans 
were hired by FS compared with using the rule of three process. In the 
Homeland Security Act of 2002, Congress provided the authority for all 
federal agencies to use category rating as an alternative to the rule 
of three.

OPM has provided guidance to agencies on the use of category rating 
systems to assess job applicants. In June 2003, OPM published interim 
regulations for agencies on the use of category rating, and OPM revised 
related guidance in its Delegated Examining Operations Handbook for 
agencies when using this alternative rating procedure. In addition, OPM 
officials told us that in July 2003, OPM provided on-site briefings to 
agency program managers, human resources officials, and contractors on 
issues related to using category rating procedures. In February 2004, 
OPM included this new hiring flexibility in its memorandum to agencies 
as one of the top 10 things agencies could do to improve federal 
hiring. OPM said it would issue final regulations on the use of 
category rating before its interim regulations sunset in June 2004. 
Officials said the changes to the final regulations will be editorial 
in nature and will not alter the procedures that agencies are to follow 
when using this alternative rating system.

Data on agencies' actual use of category rating are not readily 
available. The Homeland Security Act requires each agency that 
establishes a category rating system to report annually to Congress for 
the first 3 years on its experiences, including (1) the number of 
employees hired under the system, (2) the impact the system has on 
hiring of veterans and minorities, and (3) the way managers were 
trained in administration of the system. However, according to OPM, no 
agencies have yet reported on their use of such category rating 
systems. Moreover, data on agencies' use of category rating are not 
maintained in the Central Personnel Data File (CPDF), OPM's centralized 
database of information on federal civilian employees.

Views of the CHCO Council Members: 

Given the lack of available data on the extent to which agencies are 
using the newly authorized category rating flexibility, we asked about 
this issue in our April 2004 survey of the CHCO Council members. As 
shown in figure 2, a majority (13 of 22) of the officials responding to 
our survey said that their agencies were using category rating to 
"little or no extent." (See app. II for further information on the 
survey results.) In narrative responses to our survey questions about 
category rating, several respondents said that their agencies were not 
using category rating but were considering options, developing 
procedures, or establishing pilot programs. For example, a CHCO Council 
member responded that his department had developed procedures for 
implementing category rating and had included this flexibility as a 
tool for implementation in the department's hiring plan for fiscal year 
2004. According to this official, category rating will be particularly 
useful for those occupations for which the department anticipates 
hiring multiple applicants as well as for positions that have highly 
specialized experience requirements. Another Council member 
representing a cabinet-level department said that the department had 
drafted a policy on the use of category rating and was establishing a 
program to pilot the use of this hiring flexibility with at least one 
occupation. This respondent said that the department's human resources 
office was working with other bureaus within the department to identify 
a cross-section of occupations for which category rating would be an 
appropriate process for rating job applicants.

Figure 2: CHCO Council Members' Responses on the Extent to Which Their 
Agencies Are Using Category Rating: 

[See PDF for image] 

[End of figure] 

We also surveyed CHCO Council members about the most significant 
barriers, if any, preventing or hindering their agencies from using or 
making greater use of the newly authorized category rating flexibility 
in their hiring processes. Although the responses provided by the 
Council members varied (see fig. 3), the most frequently cited barriers 
to using category rating were (1) the lack of policies and procedures 
within the department or agency for using the flexibility, (2) the lack 
of OPM guidance for using the flexibility, (3) a need to reprogram 
automated systems to handle the new process, (4) rigid OPM rules and 
regulations, and (5) concern about possible inconsistencies in 
implementation. In narrative responses to our survey questions about 
category rating, a few respondents said that their agencies were not 
using or making greater use of category rating because of key 
stakeholders' lack of understanding about the application of veterans' 
preference and the Luevano consent decree. OPM officials told us that 
each agency needs to determine how the applicant's ACWA test points 
relate to the "best qualified" quality categories under category 
rating. Other comments from CHCOs included the following. One 
respondent said that each agency has had to research best practices and 
lessons learned prior to implementing this alternative rating system. 
Finally, a Council member from a major department said that agencies 
need a governmentwide champion to advance the use of category rating in 
their hiring processes.

Figure 3: CHCO Council Members' Responses on the Most Significant 
Barriers Preventing or Hindering Their Agencies' Use of Category 
Rating: 

[See PDF for image] 

Note: Respondents could select up to three barriers.

[End of figure] 

In our survey of CHCO Council members, we also asked about the extent 
to which OPM had assisted their agencies in using category rating and 
their level of satisfaction or dissatisfaction with that assistance 
(see app. II for further information). In narrative responses to our 
survey questions about category rating, a CHCO Council member 
representing a major department said, for example, that the department 
was reluctant to use category rating until OPM provided further 
guidance on use of the flexibility. Another Council member noted that 
the interim regulations on category rating that OPM issued in June 2003 
would expire after 1 year and wanted to know when OPM would publish the 
final regulations. Another respondent said that OPM responded to ad hoc 
questions related to the technical application of category rating, but 
generally defers to the agency to make the final determination. This 
respondent suggested that it would be beneficial for OPM to broadly 
address technical issues for agencies rather than on an ad hoc basis. 
Another respondent commented that additional training on the use of 
category rating should be provided to agencies. Another respondent 
remarked that unresolved questions around the use of category rating 
may be common to all agencies and that OPM should provide additional 
implementing guidance in the form of questions and answers.

Use of Direct-Hire Authority Could Speed Hiring for Shortage 
Occupations and Critical Needs through New Assessment and Rating 
Requirements: 

A provision of the Homeland Security Act of 2002 provides authority 
that allows agencies to appoint candidates directly to positions where 
OPM determines there is a severe shortage of candidates or a critical 
hiring need.[Footnote 34] When making appointments under the newly 
authorized direct-hire authority, agencies are not required to 
numerically rate and rank applicants nor apply the rule of three or 
veterans' preference. However, under these direct-hire appointments, 
agencies would still be required to provide public notice of the 
vacancies and screen all applicants to ensure that they meet the basic 
qualification requirements of the position.

Under OPM's interim regulations, when making determinations to allow 
agencies to use direct-hire authority, OPM may decide on its own that a 
severe hiring shortage of candidates or a critical hiring need exists, 
either governmentwide or in specified agencies, or for one or more 
specific occupations, grade levels (or equivalents), or geographic 
locations. Alternatively, an agency may, in a written request to OPM, 
identify the position or positions for which it believes a severe 
shortage or critical hiring need exists. Under OPM's rules, to 
demonstrate that a severe shortage of candidates exists for a position 
or group of positions, an agency must provide information showing that 
it is unable to identify candidates possessing the competencies 
required to perform the necessary duties of the position despite 
extensive recruitment, extended announcement periods, and the use, as 
applicable, of hiring flexibilities such as recruitment and relocation 
incentives. To prove that a critical hiring need exists, an agency must 
demonstrate that it has a critical need for the position or positions 
to meet mission requirements brought about by an exigency such as a 
national emergency, threat or potential threat, environmental disaster, 
or other unanticipated or unusual events.

As with category rating, OPM has provided agencies with guidance on the 
use of direct-hire authority in their hiring processes. In June 2003, 
OPM published interim regulations implementing direct-hire authority 
and included revised guidance in its Delegated Examining Operations 
Handbook. Additionally, OPM covered issues related to using direct-hire 
authority in the onsite briefings it provided to agency program 
officials, human resources staff, and contractors in July 2003. As with 
category rating, OPM said it would issue final regulations on the use 
of direct hire before its interim regulations sunset in June 2004. 
Officials said the changes to the final regulations will be editorial 
in nature and will not alter the criteria in determining whether there 
is a severe shortage of candidates or a critical hiring need.

Since the issuance of its June 2003 interim regulations on the use of 
direct-hire authority, OPM has approved three governmentwide direct-
hire authorities and seven agency-specific direct-hire authorities (see 
table 2). The three governmentwide authorities allow all federal 
agencies to use direct-hire procedures for specific medical 
occupations, information security positions, and jobs requiring fluency 
in Arabic and other Middle Eastern languages related to ongoing 
reconstruction efforts in Iraq. The OPM-approved agency-specific 
authorities to use direct hire cover a range of occupations, grade 
levels, and locations at six agencies, such as veterinarians and 
related positions at the Department of Agriculture principally to 
address mad cow disease. OPM officials informed us that they had not 
formally declined any agency requests for direct-hire authority since 
the interim regulations were issued in June 2003. However, they did 
point out that they had not approved all of the occupations that 
Agriculture had requested for direct hire.

Table 2: Governmentwide and Agency-Specific Direct-Hire Authorities 
Issued by OPM (June 2003 to Present): 

Governmentwide direct-hire authorities issued: Medical occupations; 
* All grade levels at all locations for the following: 
Diagnostic Radiologic Technologist (GS-0647); 
Medical Officer (GS-0602); 
Nurse (GS-610, GS-620); 
Pharmacist (GS-0660); 

Governmentwide direct-hire authorities issued: Information security 
positions; 
* Information Technology Management (Information Security) GS-2210, 
grade levels GS-9 and above at all locations; 

Governmentwide direct-hire authorities issued: Iraqi Reconstruction 
Efforts positions; 
* Jobs that require fluency in Arabic or other related Middle Eastern 
languages. Various Wage Grade and GS positions at all locations; 

Agency-specific direct-hire authorities issued: Securities and Exchange 
Commission; 
* Grade levels GS-9 and above at all locations for the following 
occupations: 
Accountants (GS- 0510); 
Economists (GS-0110); 
Securities Compliance Examiners (GS- 1831); 
* Information Technology Specialist (GS-2210) positions at grade 
levels 9 and above in the Office of Information Technology; 

Agency-specific direct-hire authorities issued: Department of 
Agriculture; 
* All locations for the following occupations: 
Veterinary Medical Officer (GS-0701, grades 9 through 13); 
Animal Health Technician (GS-0704, grades 2 through 10); 
Plant Protection and Quarantine Officer (GS-0436, grades 5 through 13); 
Plant Protection and Quarantine Aid/Technician (GS-0421, grades 2 
through 7); 
General Biological Science (GS-0401, grades 9 through 13); 
Biological Science Technician (GS-0404, grades 2 through 7); 
Microbiologist (GS- 0403, grades 9 through 13); 
Entomologist (GS-0414, grades 9 through 13); 
Botanist (GS-0430, grades 9 through 13); 
Plant Pathologist, GS- 0434 (grades 9 through 13); 
Ecologist (GS-0408, grades 9 through 13); 
Chemist (GS-1320, grades 9 through 13); 

Agency-specific direct-hire authorities issued: Department of Energy; 
* Substation Operator positions (BB-5407) at Bonneville Power 
Administration; 

Agency-specific direct-hire authorities issued: Office of Federal 
Housing Enterprise Oversight; 
* Accountant and Examiner positions in the Washington, D.C., area; 

Agency-specific direct-hire authorities issued: Department of Justice; 
* Information Technology Specialist (GS-2210) positions at grade 
levels 9 and above in the Criminal Division's Child Exploitation and 
Obscenity Section and Computer Crime and Intellectual Property Section; 

Agency-specific direct-hire authorities issued: Department of Health 
and Human Services; 
* Certain critical positions in the Centers for Medicare and Medicaid 
Services responsible for implementing the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003. 

Source: OPM.

[End of table]

While the Homeland Security Act requires agencies to report to Congress 
on their use of category rating, the act does not require agencies to 
report to Congress on their use of direct hire. However, agencies are 
required to report to OPM on the use of direct hire for inclusion in 
OPM's centralized personnel database. OPM reported that its review of 
data in the CPDF indicated that as of December 31, 2003, fewer than 50 
individuals had been hired under the new direct-hire authority. It is 
possible that when new personnel authority codes are added to personnel 
actions reported by agencies for the CPDF, there could be a lag in 
personnel officials' use of the new code and as a result the actual use 
of the authority may be underreported.

The use of direct-hire authority was also listed in the OPM Director's 
February 2004 memorandum to agency CHCOs as one of the top 10 things 
agencies can do to improve hiring. In the memo, the OPM Director urged 
agencies to look at their hiring plans, identify opportunities to use 
direct hire based on the standards in the regulations, and, if 
appropriate, ask OPM for the authority to use it. The memo also 
suggested that agencies consider using direct-hire authority at one of 
the federal job fairs that OPM was then sponsoring across the country. 
The memo noted that OPM officials were somewhat surprised by how few 
agencies had contacted OPM to request authority to use direct-hire 
procedures.

Views of the CHCO Council Members: 

Given the lack of available data on the extent to which agencies are 
using the new direct-hire authority, we asked about this issue in our 
April 2004 survey of the CHCO Council members. As shown in figure 4, a 
majority (17 of 22) of the officials responding to our survey said that 
their agencies were using direct hire to "some extent" or to "little or 
no extent." (See app. II for further information on the survey 
results.) In narrative responses to our survey questions about direct 
hire, several respondents stated that their agencies had used direct-
hire authority to fill various medical positions and small numbers of 
IT security positions. Several respondents also said that their 
agencies had not yet used direct-hire authority but were assessing the 
options for doing so. For example, a CHCO Council member representing 
an independent agency said that the agency had not thus far decided if 
it still had positions in a shortage category and would make such a 
determination after completing its workforce analysis and strategic 
assessments. A Council member from a cabinet-level department said that 
it had determined a need for direct-hire authority for acquisition 
specialists and was developing a request to OPM. Another Council member 
representing a large department said that the department's components 
were aware of the newly authorized direct-hire authority but they had 
not yet identified situations for which they would request OPM's 
approval to use the authority.

Figure 4: CHCO Council Members' Responses on the Extent to Which Their 
Agencies Are Using Direct Hire: 

[See PDF for image] 

[End of figure] 

We also surveyed CHCO Council members about the most significant 
barriers, if any, preventing or hindering their agencies from using or 
making greater use of the newly authorized direct-hire authority in 
their hiring processes. Although the responses provided by the Council 
members varied (see fig. 5), the most frequently cited barriers to 
using direct hire were (1) rigid OPM rules and regulations, (2) concern 
about possible inconsistent implementation within the department or 
agency, (3) the limited number of occupations for which the authority 
could be used, and (4) the lack of policies and procedures within the 
agency for using direct hire. In narrative responses to our survey 
questions about direct hire, a CHCO Council member representing a large 
department said, for example, that recently OPM officials informally 
told the department that OPM would likely disapprove a proposed request 
for direct-hire authority that the department desired for a specified 
occupation, even though at least one other agency had direct-hire 
authority for that same occupation. This respondent said that the 
specific position is relatively hard to fill and that OPM needs to 
relax the criteria it uses to demonstrate a shortage of qualified 
applicants. Another Council member representing an independent agency 
commented that the governmentwide direct-hire authorities that OPM has 
issued cover occupations that are generally not applicable to the 
agency or in which the agency has an extremely limited number of 
positions. In contrast, a CHCO representing a cabinet-level department 
responded that no barriers exist for using direct-hire authority.

Figure 5: CHCO Council Members' Responses on the Most Significant 
Barriers Preventing or Hindering Their Agencies' Use of Direct Hire: 

[See PDF for image] 

Note: Respondents could select up to three barriers.

[End of figure] 

In our survey of CHCO Council members, we also asked about the extent 
to which OPM had assisted their agencies in using direct hire and their 
level of satisfaction or dissatisfaction with that assistance (see app. 
II for further information). In narrative responses to our survey 
questions about direct hire, one respondent from a cabinet-level 
department said, for example, that the department had attempted to use 
direct-hire authority for IT security positions but received 
inconsistent guidance on the application of veterans' preference from 
OPM. A Council member from a large department said that OPM should 
delegate authority to approve direct hire requests to the agencies as 
permitted by the Homeland Security Act of 2002. A respondent from a 
department said that the department had surveyed its components to 
determine if it should petition OPM for direct-hire authority, but that 
most of the positions identified to date could not be justified based 
on the OPM criteria.

Conclusions: 

Congress, OPM, and agencies have recognized the need to improve the 
federal hiring process and have initiated numerous efforts to address 
key problem areas. Under the Homeland Security Act of 2002, agencies 
have been given new personnel flexibilities to improve the hiring 
process. In addition, DHS and DOD have been given authority to 
fundamentally reform their personnel systems, which, if successfully 
implemented, could aid in improving their hiring processes. In addition 
to these new hiring flexibilities given to agencies, agencies can 
address many of their other hiring challenges by applying human capital 
tools and flexibilities already available under existing laws and 
regulations. Rather than wait for reforms to arrive, agency leaders 
need to take the initiative to be more competitive in attracting new 
employees with critical skills.

Although the agencies have primary responsibility to improve their 
hiring processes, OPM can take additional action. As we noted earlier, 
we previously recommended that OPM, working with the CHCO Council, 
should serve as a clearinghouse to foster more use of personnel 
flexibilities. In the hiring area, OPM could gather, analyze, and 
report on when, where, and how agencies are using, or should use, 
direct hire and category rating procedures to aid in their hiring 
efforts.

The federal government is now facing one of the most transformational 
changes to the civil service in half a century, which is reflected in 
the new personnel systems for DHS and DOD and in new hiring 
flexibilities provided to all agencies. Today's challenge is to define 
the appropriate roles and day-to-day working relationships for OPM and 
individual agencies as they collaborate on developing innovative and 
more effective hiring systems. Moreover, human capital expertise within 
the agencies must be up to the challenge for this transformation to be 
successful and enduring.

Agency Comments and Our Evaluation: 

The Director of OPM provided written comments on a draft of this 
report, which are shown in appendix III. In these written comments, the 
OPM Director said that OPM has done much to assist agencies and 
increase their knowledge about the hiring flexibilities available to 
them. She highlighted, for example, her memoranda to agencies that 
contain information and guidance on the use of hiring flexibilities as 
well as training that OPM provided to agencies as part of the OPM-
sponsored "Working for America" recruitment fairs. She underscored that 
agencies must rise to the challenge, provide consistent leadership at 
the senior level, take advantage of the training opportunities offered 
by OPM, and make fixing the hiring process a priority.

The OPM Director also commented that the report "appears to rely upon 
perceptions that are not consistent with the facts." OPM explained this 
concern in additional technical comments that were provided by E-mail. 
In these technical comments, OPM raised objections to our use of 
narrative responses from our survey of CHCO Council members and 
requested that many of these responses be deleted from the final 
report. OPM said that in some instances the opinions expressed by the 
CHCO Council members made reference to situations or circumstances that 
were outside of the respondent's agency or personal knowledge and were 
unsubstantiated. However, consistent with OPM's position that agencies 
must take greater responsibility for their own hiring processes and 
that it has effectively trained agency officials on hiring, it seems to 
reason that the CHCOs of these departments and agencies should be in a 
position to comment knowledgeably on their agencies' efforts--and OPM's 
efforts in assisting them--to improve hiring processes. As noted in the 
description of our scope and methodology for this report (see app. I), 
the results of our survey represent the views and opinions of the 
responding CHCO Council members. In drafting this report, we provided a 
full range of narrative responses from CHCO Council members--both 
positive and negative--related to OPM's role in helping to improve the 
federal hiring process. In our survey to the CHCO Council members (see 
app. II), we specifically noted that our report would not identify the 
names of individual respondents or their associated departments or 
agencies. We took this step to better ensure that we received direct 
and candid survey responses. Moreover, we make direct reference to 
actions taken and documents produced on federal issues throughout the 
draft.

In its technical comments, OPM also offered suggested changes to 
clarify various issues related to personnel policy and procedures. 
Where appropriate, we made changes to the report to address the 
comments we received.

We will send copies to the Chairman and Ranking Minority Member of the 
House Committee on Government Reform, the Chairman and Ranking Minority 
Member of the Senate Committee on Governmental Affairs, and other 
interested congressional parties. We will also provide copies to the 
Director of OPM. In addition, we will make copies available to others 
upon request. The report will be available at no charge on the GAO Web 
site at http://www.gao.gov.

If you have any questions about this report, please contact me on (202) 
512-6806 or mihmj@gao.gov. Major contributors to this report are listed 
in appendix IV.

Signed by: 

J. Christopher Mihm: 
Managing Director, Strategic Issues: 

[End of section]

Appendixes: 

Appendix I: Objectives, Scope, and Methodology: 

The objectives of this study were to: 

* provide information on the status of recent efforts to help improve 
the federal hiring process; and: 

* determine the extent to which federal agencies are using the new 
hiring flexibilities--category rating and direct-hire authority--
authorized by the Homeland Security Act of 2002.

This study builds on the information, conclusions, and recommendations 
of our report: Human Capital: Opportunities to Improve Executive 
Agencies' Hiring Processes (GAO-03-450, May 30, 2003). That report 
concluded that the federal hiring process needed improvement and made 
recommendations to address problems with the job classification 
process, job vacancy announcements and Web postings, manual hiring 
processes, and hiring assessment tools.

To respond to the objectives on this engagement, we interviewed 
officials from the Office of Personnel Management (OPM) and members of 
the subcommittee on the hiring process of the Chief Human Capital 
Officers (CHCO) Council. Specifically, our questions and review 
centered on actions being taken to address the hiring problems and 
recommendations identified in our May 2003 report, what new hiring 
initiatives were underway, and an assessment of the extent to which 
agencies are using category rating and direct-hire authority. We also 
collected and reviewed OPM documents related to federal hiring.

In addition, we obtained opinions and views on efforts to improve the 
federal hiring process as well as agencies' use of new hiring 
flexibilities by interviewing human capital experts at the following 
organizations.

* The U.S. Merit Systems Protection Board (MSPB) is an independent, 
quasi-judicial agency in the executive branch 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 (NAPA) is an 
independent, nonpartisan, nonprofit, congressionally charted 
organization that assists federal, state, and local governments in 
improving their performance.

* The National Partnership for Public Service is a nonpartisan, 
nonprofit organization dedicated to revitalizing the public service.

We also conducted a survey of the members of the CHCO Council. The CHCO 
Council currently comprises 25 members: the Director of OPM; the Deputy 
Director for Management of the Office of Management and Budget (OMB); 
CHCOs from executive branch departments, and other agency CHCOs invited 
to join by the OPM Director, who serves as chair of the Council. We 
sent our questionnaire to the 23 Council members serving as CHCOs 
representing federal departments and agencies; our survey did not 
include the Director of OPM or the Deputy Director for Management of 
OMB. Specifically, the Council members we surveyed were the CHCOs from 
the Departments of Agriculture, Commerce, Defense, Education, Energy, 
Health and Human Services, Homeland Security, Housing and Urban 
Development, Interior, Justice, Labor, State, Transportation, 
Treasury, and Veterans Affairs; and CHCOs from the Central Intelligence 
Agency, Environmental Protection Agency, General Services 
Administration, National Aeronautics and Space Administration, Nuclear 
Regulatory Commission, OPM, Pension Benefit Guarantee Corporation, and 
Social Security Administration. Twenty-two of the 23 Council members 
responded to our questionnaire. The CHCO Council member from the 
Central Intelligence Agency did not respond to our survey because his 
representative said the agency was an excepted service agency and thus 
the survey questions were not relevant.

Our survey of the CHCO Council members included questions to help us 
address both engagement objectives. For the first objective, we asked 
questions about the parts of the hiring process we had identified in 
our May 2003 report--specifically, reforming the classification 
process, automating hiring processes, improving job announcements and 
Web postings, and developing improved hiring assessment tools. For the 
second objective, we asked questions about the use of category rating 
and direct-hire authority and the possible barriers hindering agencies' 
use of these two new hiring flexibilities.

The results of our survey reflect the views and opinions of the 
responding CHCO Council members. As noted above for objective one, we 
asked the survey recipients if their agencies had made efforts in the 
four hiring areas; however, we did not ask respondents to specifically 
identify those efforts nor did we conduct other data collection efforts 
to verify the nature or extent of such efforts. Similarly, for 
objective two related to the use of category rating or direct-hire 
authority, we asked the Council members their views about the extent of 
use of the two flexibilities.

The questionnaire we used contained 34 questions and was developed from 
March through April 2004 by a social science survey specialist and 
other individuals knowledgeable about the OPM reforms. The 
questionnaire was reviewed by other survey specialists and experts in 
the content area and pretested with four government human capital 
professionals familiar with the initiatives to develop a questionnaire 
that was unambiguous and unbiased. We made changes to the content and 
format of the final questionnaire based on the reviews and pretest 
results.

The survey was conducted using an Active X-enabled E-mail attachment. 
The survey was sent to all agency members of the CHCO Council beginning 
on April 15, 2004, and all recipients of our survey replied to our 
request for information by May 7, 2004. Respondents were given the 
option of returning the survey as an E-mail attachment or printing the 
questionnaire and returning it via fax. Data for this study were 
entered directly into the instrument by the respondents and converted 
into a database for analysis. Appendix II presents a copy of the survey 
and the responses of the CHCO Council members to the closed-ended 
questions on our survey.

As part of our analysis process, we examined CHCO Council members' 
answers in response to questions asking them if they had any additional 
comments to make on a specific topic or additional barriers to 
identify. We reviewed the additional barriers identified and counted 
the number of instances where two or more respondents identified a 
similar barrier and included those frequency counts in our report. 
Given the broad scope of the questions asking for any additional 
comments, we did not perform a similar content analysis of CHCO 
responses to those broad questions. However, we included some of those 
additional comments by individual CHCOs in this report to illustrate 
the diversity of views provided by the CHCOs on these topics.

In addition, we used data from OPM's Central Personnel Data File (CPDF) 
to identify the total new hires by federal department and agency for 
fiscal year 2003. We also analyzed data from the CPDF in an attempt to 
identify the extent to which agencies are using the direct-hire 
authority contained in the Homeland Security Act of 2002. Data on 
agencies' use of category rating is not maintained in the CPDF. As 
noted in the body of this report, it is possible that when new 
personnel authorities are authorized (any new codes established for the 
CPDF), personnel officials might continue to use old codes and 
therefore underreport the use of the new authority. With the exception 
of the concern just noted, based on previous GAO work, the CPDF data 
are sufficiently reliable for the purpose of providing background 
information on new hires.[Footnote 35]

We provided a draft of this report to OPM for review and comment. OPM's 
comments are shown in appendix III. We did our review in Washington, 
D.C., from March 2004 through May 2004 in accordance with generally 
accepted government auditing standards.

[End of section]

Appendix II: Summary Results of GAO Survey of Members of the Chief 
Human Capital Officers Council: 

[See PDF for image] 

[End of figure] 

[End of section]

Appendix III: Comments from the Office of Personnel Management: 

OFFICE OF THE DIRECTOR:

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

June 1, 2004:

The Honorable David M. Walker: 
Comptroller General:
U.S. General Accounting Office: 
441 G Street, NW:
Washington, DC 20548:

Dear Mr. Walker:

Thank you for the opportunity to provide input to your recent draft 
report regarding Federal hiring. The focus of the report, improved 
Federal hiring, as you know is a top priority of this Administration 
and we commend you on the timeliness of your study, and the additional 
interest it will stimulate as OPM continues to drive this issue. The 
points offered in this letter are aimed at providing a wider 
representation of the efforts currently underway by OPM and our Federal 
teammates within the agencies.

We are concerned that the report appears to rely upon perceptions that 
are not consistent with the facts. For example, we are working on a 
continuous basis with members of the Chief Human Capital Officers 
(CHCO) Council to increase their knowledge about the hiring 
flexibilities available to them. Since June 2003, we have met with the 
CHCO Council on a regular basis to share information and provide 
guidance to ensure agencies were fully informed about the newest 
flexibilities: category rating systems for competitive examining and 
selection and direct-hire authority in circumstances where there is a 
severe shortage of qualified candidates or a critical mission need. We 
chose the first CHCO Academy session to be a training program on 
existing hiring flexibilities. This session was attended by eight of 
the twenty-three Chief Human Capital Officers - the CHCO's from the 
Departments of Defense, Treasury, State, Justice, and Agriculture, as 
well as the General Services Administration, Social Security 
Administration and the Environmental Protection Agency. Since then, in 
an effort to fully train all agency CHCO's and their staffs, we have 
provided, through a variety of delivery sources, agencies with a number 
of additional opportunities to receive information on the use of these 
flexibilities. For example, I have issued numerous memoranda which 
contain information and guidance on these flexibilities and other ways 
to improve Federal hiring. Recently OPM delivered two briefing sessions 
on the flexibilities; as part of the OPM-sponsored "Working for 
America" recruitment fairs, we delivered advance training to agencies 
on how to use the hiring flexibilities, and provided information and 
technical assistance on the flexibilities at the events. In addition, 
we have presented Professional Development Workshops on workforce 
planning which included in-depth training on the flexibilities; and our 
Human Capital Desk Officers provide direct, on-going support to the 
agencies in all aspects of strategic human capital management including 
the effective use of the hiring flexibilities.

As you can see, much has been done by OPM. Nevertheless, we are still 
extremely disappointed with the lack of sustained progress in achieving 
the broad Government-wide improvements that are required to meet the 
needs of agencies and the legitimate expectations of applicants. I am 
convinced that the next step to improving Federal hiring is to measure 
the time it takes agencies to hire. In that regard, OPM set a target 
for the Federal recruitment process in May 2004 by issuing a 45-day 
hiring model to agencies that tracks time-to-hire from the date a 
vacancy announcement closes to the date an offer is extended. The model 
was developed and implemented within OPM and has demonstrated results. 
Similar to the proven 30-day SES hiring model issued in 2003, the 45 
day model has already begun a dialogue within agencies on how to better 
drive results within the area of hiring. Because "what gets measured 
gets done," OPM will be exploring ways to advance goals and 
measurements within Federal agencies.

Federal agencies must rise to the challenge, take advantage of the 
training opportunities offered by OPM, make fixing the hiring process a 
priority. and provide consistent leadership at the senior level. We are 
hopeful that you will find this information useful in revising your 
draft report. Under separate cover staff provided technical edits. Once 
again, we thank you for the opportunity to comment, and look forward to 
reviewing the revised report.

Sincerely,

Signed by: 

Kay Coles James: 
Director: 

[End of section]

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

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

Acknowledgments: 

Major contributors to this report include K. Scott Derrick, Karin 
Fangman, Stephanie M. Herrold, Trina Lewis, John Ripper, Edward 
Stephenson, and Monica L. Wolford.

(450317): 

FOOTNOTES

[1] U.S. General Accounting Office, Human Capital: Opportunities to 
Improve Executive Agencies' Hiring Processes, GAO-03-450 (Washington, 
D.C.: May 30, 2003).

[2] Category rating permits an agency manager to select any job 
candidate placed in a best-qualified category rather than being limited 
to three candidates under the "rule of three." Direct-hire authority 
allows an agency to appoint individuals to positions without adherence 
to certain competitive examination requirements when there is a severe 
shortage of qualified candidates or a critical hiring need. These two 
hiring flexibilities are contained in the Chief Human Capital Officers 
Act of 2002, Title XIII of the Homeland Security Act of 2002, Public 
Law 107-296, Nov. 25, 2002.

[3] The CHCO Council member from the Central Intelligence Agency did 
not respond to the survey because his representative said the agency 
was an excepted service agency and thus the survey questions were not 
relevant.

[4] 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. In response to the consent 
decree, OPM developed the Administrative Careers with America (ACWA) 
examination. The consent decree also established two special hiring 
programs, Outstanding Scholar and Bilingual/Bicultural, for limited use 
in filling former PACE positions.

[5] U.S. General Accounting Office, Human Capital: OPM Can Better 
Assist Agencies in Using Personnel Flexibilities, GAO-03-428 
(Washington, D.C.: May 9, 2003).

[6] U.S. General Accounting Office, Human Capital: Observations on 
Agencies' Implementation of the Chief Human Capital Officers Act, GAO-
04-800T (Washington, D.C.: May 18, 2004).

[7] Positions may be excepted from the competitive service by statute, 
by the President, or by 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). Examples of excepted service 
positions include chaplains, attorneys, and political appointees. 5 
C.F.R. Part 213, Subpart C.

[8] The CHCO provisions, along with the hiring flexibilities, are 
contained in the Chief Human Capital Officers Act of 2002, Title XIII 
of the Homeland Security Act.

[9] The CHCO Council has subcommittees on (1) the hiring process, (2) 
performance management, (3) leadership development and succession, (4) 
employee conduct and poor performers, and (5) emergency preparedness.

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

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

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

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

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

[15] The GS is the federal government's main pay system for "white-
collar" positions. Each of the 15 grades of the GS are divided into 10 
specific pay levels called "steps."

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

[17] Public Law 107-296, Nov. 25, 2002. Title 5 is the title of the 
U.S. Code that stipulates civilian personnel law for much of the 
federal civil service.

[18] See our recent report describing several personnel demonstration 
projects: U.S. General Accounting Office, Human Capital: Implementing 
Pay for Performance at Selected Personnel Demonstration Projects, GAO-
04-83 (Washington, D.C.: Jan. 23, 2004).

[19] U.S. General Accounting Office, Human Capital: DHS Personnel 
System Design Effort Provides for Collaboration and Employee 
Participation, GAO-03-1099 (Washington, D.C.: Sept. 30, 2003). Also, we 
reported on key practices and steps that can help agencies implement 
successful transformations in modernizing their human capital policies 
in the following reports: Results-Oriented Cultures: Implementation 
Steps to Assist Mergers and Organizational Transformations, GAO-03-669 
(Washington, D.C.: July 2, 2003); and Highlights of a GAO Forum: 
Mergers and Transformations: Lessons Learned for a Department of 
Homeland Security and Other Federal Agencies, GAO-03-293SP (Washington, 
D.C.: Nov. 14, 2002).

[20] The National Defense Authorization Act for Fiscal Year 2004 
authorized DOD to establish a new civilian personnel system that is 
flexible, contemporary, and consistent with merit system principles. 
Public Law 108-136, Nov. 24, 2003.

[21] U.S. General Accounting Office, Department of Defense: Further 
Actions Needed to Establish and Implement a Framework for Successful 
Financial and Business Management Transformation, GAO-04-551T 
(Washington, D.C.: Mar. 23, 2004).

[22] U.S. Office of Personnel Management, Draft: OPM's Guiding 
Principles for Civil Service Transformation (Washington, D.C.: April 
2004).

[23] U.S. Merit Systems Protection Board, Competing for Federal Jobs - 
Job Search Experiences of New Hires (Washington, D.C.: February 2000); 
and Help Wanted: A Review of Federal Vacancy Announcements (Washington, 
D.C.: December 2002).

[24] Concern over OPM's original proposal also generated a restriction 
precluding OPM from using its fiscal year 2004 funds to prohibit any 
agency from contracting with companies to provide online employment 
applications and processing services. Departments of Transportation and 
Treasury, and Independent Agencies Appropriations Act, 2004, Pub. L. 
No. 108-199, div. F, title VI, § 628, 118 Stat. 349, 356-7 (Jan. 23, 
2004).

[25] U.S. General Accounting Office, Electronic Government: 
Initiatives Sponsored by the Office of Management and Budget Have Made 
Mixed Progress, GAO-04-561T (Washington, D.C.: Mar. 24, 2004).

[26] The American Customer Satisfaction Index (ACSI) rates customer 
service with a score of 0 to 100. The satisfaction score for the 
USAJOBS Web site is determined using a 90-day average based on Web site 
visitors' responses to an online survey. OPM officials stated that 
although they have increased customer satisfaction for the Web site, 
their intention is to significantly surpass the governmentwide average 
score of 71.

[27] U.S. General Accounting Office, Human Capital: Effective Use of 
Flexibilities Can Assist Agencies in Managing Their Workforces, GAO-03-
2 (Washington, D.C.: Dec. 6, 2002).

[28] The Immigration and Naturalization Service and the U.S. Customs 
Service are now part of the Department of Homeland Security.

[29] GAO-03-2.

[30] GAO-03-428.

[31] GAO-04-800T.

[32] Compensable veterans with a disability of 10 percent or more who 
are rated as eligible "float to the top" of the highest quality group 
except in cases involving hiring for professional or scientific 
positions at or above grade GS-9.

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

[34] Section 1312(a)(1) of the Homeland Security Act of 2002 (amending 
5 U.S.C. 3304). This provision also permits OPM to delegate the 
authority to make such determinations under OPM criteria.

[35] U.S. General Accounting Office, OPM's Central Personnel Data File: 
Data Appear Sufficiently Reliable to Meet Most Customer Needs, GAO/GGD-
98-199 (Washington, D.C.: Sept. 30, 1998).

GAO's Mission: 

The General Accounting Office, the investigative arm of Congress, 
exists to support Congress in meeting its constitutional 
responsibilities and to help improve the performance and accountability 
of the federal government for the American people. GAO examines the use 
of public funds; evaluates federal programs and policies; and provides 
analyses, recommendations, and other assistance to help Congress make 
informed oversight, policy, and funding decisions. GAO's commitment to 
good government is reflected in its core values of accountability, 
integrity, and reliability.

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through the Internet. GAO's Web site ( www.gao.gov ) contains 
abstracts and full-text files of current reports and testimony and an 
expanding archive of older products. The Web site features a search 
engine to help you locate documents using key words and phrases. You 
can print these documents in their entirety, including charts and other 
graphics.

Each day, GAO issues a list of newly released reports, testimony, and 
correspondence. GAO posts this list, known as "Today's Reports," on its 
Web site daily. The list contains links to the full-text document 
files. To have GAO e-mail this list to you every afternoon, go to 
www.gao.gov and select "Subscribe to e-mail alerts" under the "Order 
GAO Products" heading.

Order by Mail or Phone: 

The first copy of each printed report is free. Additional copies are $2 
each. A check or money order should be made out to the Superintendent 
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 
more copies mailed to a single address are discounted 25 percent. 
Orders should be sent to: 

U.S. General Accounting Office

441 G Street NW,

Room LM Washington,

D.C. 20548: 

To order by Phone: 

Voice: (202) 512-6000: 

TDD: (202) 512-2537: 

Fax: (202) 512-6061: 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470: 

Public Affairs: 

Jeff Nelligan, managing director, NelliganJ@gao.gov (202) 512-4800 U.S.

General Accounting Office, 441 G Street NW, Room 7149 Washington, D.C.

20548: