The Classification Act reflected the world as it was then. More than 70 percent of the government jobs consisted of clerical work, and 75 percent of the workers were in the lower grades, GS-7 and below.

The assumptions of 1949 did not anticipate the situation today, when clerical workers are in the minority and only 30 percent of federal civilians are in grades GS-7 and below.

“ In the age of the computer, the federal government is still using—with relatively minor modifications—a compensation system that was custom-built for the process-obsessed age of the file clerk,” said Kay Coles James, director of the Office of Personnel Management. “A structure that regarded performance differences as negligible in the context of highly standardized clerical routines has lasted to a time when the nature of knowledge work makes performance differences a crucial element in the value of many jobs.”

In today’s system, “performance does not matter very much,” James said in a 2002 white paper. Pay increases depend chiefly on remaining on the employment rolls instead of on meeting or exceeding performance expectations.

Rep. Tom Davis III (R-Va.), chairman, House Government Reform Committee, agrees with James. “Civil Service is more of a seniority system than a merit system,” he said.

Hiring new people is a drawn-out process under Civil Service rules, making it difficult to compete in the marketplace for the occupational specialties most in demand.

Disciplinary actions are subject to extensive review, and poor performers must be given a “performance improvement period” before action can be taken against them.

“ In one case at the Defense Logistics Agency, it took nine months to fire an employee—with previous suspensions and corrective actions—who had repeatedly been found sleeping on the job,” said Deputy Secretary of Defense Paul D. Wolfowitz.

Last year, Congress authorized the new Department of Homeland Security to depart from traditional Civil Service procedures in hiring and firing.

Pentagon Seeks Major Change

This spring, Secretary of Defense Donald H. Rumsfeld called for sweeping changes that go far beyond anything seen at Homeland Security. His plan is to introduce a whole new personnel system for the 700,000 civilian employees of the Department of Defense.

Rumsfeld’s proposal was the lead item in a 205-page legislative package, “The Defense Transformation for the 21st Century Act,” that the Pentagon sent to both houses of Congress on April 10.

The heart of the package was the “National Security Personnel System,” which would exempt the Defense Department from many current rules on how civil servants are hired, fired, promoted, and paid. It would authorize the Secretary of Defense to “establish, and from time to time adjust, a human resources management system” for the department.

It would feature pay for performance, replacing the present procedure in which pay is based mainly on longevity and seniority.

“ Most of the plan has been tried before here and there across government: pay for performance, a faster hiring process, more managerial authority, and streamlined job descriptions,” said Paul C. Light, a professor at New York University and a senior fellow of the Brookings Institution, writing in the Washington Post on May 9. “But because the proposal covers more than a third of the federal workforce, contains unreviewable authorities for the Secretary that have never been tried, and comes on the heels of the Homeland Security breakout, it would effectively mark the end of the Civil Service as we know it.”

The key portion of Rumsfeld’s proposal is entitled “Transformation of Civilian Personnel.” It accounts for only 33 pages of the 205-page document, and that includes a “section-by-section analysis,” written by the Pentagon lawyers. Of that, draft legislation for the National Security Personnel System is 17 double-spaced pages.

The package includes a mixed bag of other proposals—ranging from extension of term and age limits for general and flag officers to environmental exemptions and the elimination of 183 Pentagon reports to Congress—but these have gotten less public notice. Attention has fixed on the big plans for Civil Service.

Details Not Specified

One of the startling things about the National Security Personnel System is the absence of detail on what the Pentagon actually proposes to do. The requested powers for the Secretary of Defense are stated in very broad terms.

“ We are not being asked to approve a new personnel plan,” said Rep. Jim Cooper (D-Tenn.). “We are being asked to allow the Secretary to think up a new plan.”

David S.C. Chu, undersecretary of defense for personnel and readiness, said the Pentagon’s intention is to draw on alternative civilian personnel management approaches demonstrated over the past 20 years in test programs involving 30,000 civilian employees. Chu pointed to a summary of these approaches published recently in the Federal Register. “We need the authority to extend these best practices to the entire Department of Defense,” said Chu.

However, Cooper pointed out, “There is no statutory language that requires you to follow these recommendations. You’re asking us to buy your good intentions.”

Rep. Henry A. Waxman (D-Calif.) was likewise suspicious of the proposal. “It gives the Secretary of Defense a blank check to undo, in whole or in part, many of the Civil Service laws in the United States code,” said Waxman. “These provisions have been adopted over the past century to ensure that our federal government did not become a patronage system.”

The draft prescribes extraordinary powers for the Secretary of Defense. It produced this exchange between Chu and Rep. John M. Spratt Jr. (D–S.C.) at a recent House Armed Services Committee hearing:

“ Spratt: I keep coming across this phrase in the draft, ‘at the Secretary’s sole, exclusive, and unreviewable discretion.’ ... Those are strange words for the government of the United States of America. ... What is the remedy in case the Secretary abuses that enormous authority?

“ Chu: I’m not a lawyer. ...

“ Spratt: I am. And I’m telling you this is—this is a hell of a grant of authority.”

Nobody is more opposed to the bill than Bobby L. Harnage Sr., national president of the American Federation of Government Employees, whose union represents some 600,000 federal workers.

“ It’s about unbridled power to move money and jobs to political favorites, cronies, relatives, and concubines,” Harnage thundered. “DOD’s legislative proposal amounts to nothing more than giving the Secretary of Defense the power to decide which laws and regulations he’d rather do without.”

Davis, the Virginia Republican, said that objections were coming mainly from unions and their supporters. “You have a handful of union bosses who are afraid of losing their power,” Davis told the Washington Times. “The unions give millions to the Democrats, and now they’re calling in their marker.”

Moving Fast

The House moved out promptly. In April, Davis and Rep. Duncan Hunter (R-Calif.), chairman of the House Armed Services Committee, jointly introduced the proposal as H.R. 1836, the Civil Service and National Security Personnel Improvement Act.

It passed Davis’s committee, with minor modifications, on May 7. Hunter’s committee sent the Civil Service reforms forward May 13 as a recommended part of the defense authorization bill.

The Senate was slower to move. Sen. John Warner (R-Va.), chairman of the Senate Armed Services Committee, deferred to the Senate Governmental Affairs Committee on the Civil Service portions of the Pentagon draft.

Some members of Congress thought the bill was moving too fast.

“ Congress received this 200-page bill two weeks ago, on the day we left town before the recess,” said Rep. Ike Skelton of Missouri, the ranking Democrat on the House Armed Services Committee. “Its scope is absolutely enormous. ... This bill seeks to make the most sweeping changes to the Department of Defense since the Goldwater–Nichols legislation. ... The Goldwater–Nichols bill was developed over a period of five legislative years. And this committee will have less than three weeks to consider these sweeping changes. ... I have serious reservations about the substance of many of the proposals.”

Wolfowitz stuck by the desire for urgency when he appeared before the House Government Reform Committee on May 6.

“ We understand it would be ideal if there were more time for you to consider this bill,” said Wolfowitz. “But we also recognize the fact that if we were to delay and not get on this year’s defense authorization bill, this legislation may not become law until late 2004 or even 2005.”

Waxman objected, “Now that the Defense Department has marched through Iraq in three weeks, it intends to do the same with Congress.”

Wolfowitz noted that the final bill may not have reached Congress until April 10 but that DOD officials, in the months leading up to formal delivery, met with members and staff on more than 100 occasions to discuss various provisions.

That prompted Waxman to reply, “On the Democratic side of the aisle of this committee, which has primary jurisdiction over the Civil Service issues, we haven’t had any consultation with anyone until the proposal was laid out before us. ... We also heard last week from the unions that they weren’t consulted about it either.”

A mild dissent was heard from Republican Sen. Saxby Chambliss of Georgia. “We agree with the Department of Defense that we need to give as much flexibility as possible when it comes to civilian employees,” Chambliss told the newspaper Roll Call, “but I’m not prepared to say today that I want to give complete control over civilians to the department. This is such a major restructuring. I’m not going to do something that major in a two- or three-day period.”

The Civil Service package passed the House May 22 by a vote of 361–68 as part of the defense authorization bill. However, it was not included in the authorization bill adopted by the Senate, leaving the final decision to be ironed out in conference.

The Problem With Civil Service

Most criticisms of the Pentagon’s proposal were about the rushed timing and the lack of specificity. There is considerable agreement that Civil Service is in dire need of reform.

Davis, opening a hearing of the House Government Reform Committee, said that “it takes an average of five months to hire a new federal employee; 18 months to fire a federal employee; pay raises are based on longevity rather than performance; and the protracted collective bargaining process set up in Title 5 can delay crucial action for months and in some cases years. On top of all that, the vast majority of federal employees themselves recognize that dealing with poor performance is a serious problem in their agencies.”

At a hearing of the House Armed Services Committee, Hunter added, “If you need a position filled, you need to do something quickly. And, instead of being able to have a civil servant do it and wait that three months, it’s easier simply to order a sergeant to do it, because he’s under the direct chain of command in the military.

And he marches out smartly and gets it done. But the preferable thing to do is to keep the sergeant in his military billet and use a civil servant, if possible, if you could qualify him quickly.”

Chu, testifying April 29, said that “in the Iraqi theater of operations, only 1,500 of the 9,000 civilians supporting the effort are defense civilian employees. The rest are contractors. We should have the flexibility to identify, deploy, and sustain more of our civilian workforce in these operations, when necessary.”

Rumsfeld himself argued the reform case at a May 14 Senate hearing. “Today we have some 320,000 uniformed people doing what are essentially nonmilitary jobs,” Rumsfeld said, “and yet we are calling up Reserves to help deal with the global war on terror. The inability to put civilians in hundreds of thousands of jobs that do not need to be performed by men and women in uniform puts unnecessary strain on our uniformed personnel and added cost to the taxpayers. This has to be fixed.”

Writing on the op-ed page of the Washington Post, Philip K. Howard, a lawyer and author of The Death of Common Sense: How Law Is Suffocating America, described the endless delays that go with attempted disciplinary actions. He said that, according to data from the Office of Personnel Management, 64,000 federal employees were designated “poor performers” in 2001. However, only 434 of these were dismissed.

“ After Sept. 11, 2001, the US Customs Service immediately reassigned its best inspectors to better secure our northern border,” Howard said. “The union filed a legal proceeding claiming that the reassignments required a nationwide survey of interested civil servants, from which choices should be made on the basis of seniority.”

The Pentagon’s manpower chief, Chu, said that changing or enlarging an employee’s duties is a major problem. “Under the current system,” he said, “you have to rewrite the job description [and] recompete the position, which actually leads to some employees declining to be considered for expanded responsibilities, for fear they won’t win the next competition.”

Donald Devine, a former director of the Office of Personnel Management, is a strong supporter of the proposed changes. “The prognosis for reform has never been brighter,” Devine wrote in a column for the Washington Times. “War is simply too important to be left to union micromanaging or in the hands of an incompetent executive who has been inappropriately promoted simply because he or she had seniority.”

National Security Personnel System

The new system, according to the section-by-section analysis in the Pentagon package, “would feature streamlined recruitment and candidate ranking, universal pay banding for five career groups, supervisory pay, and simplified appointments, assignments, and reductions in force.”

Pay for Performance. Edward C. Aldridge, then undersecretary of defense for acquisition, technology, and logistics, told Congress that the pay-for-performance approach has worked well in test programs.

“ You probably will get some criticism of it, but it’s mostly from those people who are not performing,” Aldridge said. “They don’t like it because they are not given the automatic pay raises every year. This system pays for performance, not for attendance. ... The people who are the high performers—who are the ones you really want to keep—love it. And some of the lower performers do not.”

In February, the US Merit Systems Protection Board newsletter summarized the results of an ongoing demonstration project at the Air Force Research Lab. “The average 2002 pay increase for employees in this demonstration project was 5.8 percent,” the newsletter said. “The largest was 31.8 percent. Just as importantly, employees who have not made significant contributions to organizational performance often choose to work elsewhere.”

Harnage and AFGE oppose this approach. “At a minimum, if performance-based contingent pay is on an individual-by-individual basis, the message is that the work of lone rangers is valued more than cooperation and teamwork,” Harnage testified in April. “Further, it states at the outset that there will be designated losers. Everyone cannot be a winner; someone must suffer.”

“ If an employee has performed so badly that a salary reduction is appropriate, there is the opportunity for a limited salary reduction in the pay-for-performance approach that we would recommend,” Chu told Congress. “The employee, of course, has the right to appeal those decisions.”

The major difficulty with pay-for-performance systems is figuring out how to rate an employee’s performance. “Most existing federal performance appraisal systems, including a vast majority of DOD’s systems, are not currently designed to support a meaningful performance-based pay system,” said David M. Walker, comptroller general and head of the General Accounting Office, in testimony May 1 to the House Armed Services Committee.

Apparently, however, Walker does not regard this as an insurmountable problem. In April, he requested Congressional approval for GAO to create a performance-based pay system for its own employees.

Pay Banding. The Defense Department plan calls for doing away with the General Schedule, with its traditional grades GS-1 through GS-15. Replacing it would be a system comprising five career groups with their corresponding “pay bands.” DOD no longer would grant step increases or across-the-board annual raises.

It would be possible to offer higher starting salaries. The Merit Systems Protection Board says, “A high performing employee could move to the top salary of a pay band much more quickly than is possible in the GS system. In contrast, a low or marginal employee might get no incentive pay and only part—or even none—of the general increase.”

The notice in the Federal Register identified these five career groups, or “CGs”:

• CG1 Scientific and Engineering Research.
• CG2 Professional and Administrative Management.
• CG3 Engineering, Scientific, and Medical Support.
• CG4 Business and Administrative Support.
• CG5 College Cooperative Education Program.
• Every occupational specialty fits into one of these groups. Firefighters, for example, would be part of CG4.
• Easier Hiring. Chu told the House Armed Services Committee, “We are not going to succeed if we send our representatives, as I do, to college job fairs and we tell young men and young women, ‘I’ll let you know in three months whether you have a job.’ The next table—where GE sits, where Microsoft sits—they’re telling ... the quality college graduate, ‘You have a job. I’ll check your references. As long as those pan out, it’s yours.’ We’re not going to succeed if it takes three months to change someone’s job qualification.”

The proposal also gives the Secretary of Defense considerable latitude in hiring “highly qualified experts” and in contracting for “personal services” to carry out the national security mission. Federal retirees, age 55 and older, could be hired for periods of two years without loss of their pensions “to fill needs that are not otherwise met by civilian employees.”

Labor Relations. The bill would allow the Department of Defense to engage in collective bargaining at the national level in lieu of dealing with 1,366 union locals. Some union leaders see this as further evidence that the Pentagon’s real agenda with this proposal is union busting.

They also complain that they were not consulted before the Defense Department sent the proposal to Congress, but DOD insists that is not the case. “We have listened to our employees and to labor, which is different than saying ‘labor unions,’ before we designed this system,” Chu said.

Rep. Steny H. Hoyer (D-Md.), whose district has a big population of government workers, is not convinced. “This measure was conceived, as I understand it, by a handful of the President’s closest advisors in the department and perhaps in the White House as well, without any public input,” Hoyer said. “Regrettably, not a single federal employee group was consulted, not one.”

Precedence Over OPM. Regulations for the National Security Personnel System would be “prescribed jointly” with the Office of Personnel Management, but in case of disagreement, the Pentagon’s view prevails.

OPM supports the reorganization proposal. At an April hearing, Cooper, the Tennessee Democrat, rhetorically asked Dan G. Blair, OPM’s deputy director, why OPM is so compliant. “If you’re so willing to concede—what?—one-third of your jurisdiction, why you don’t resign in protest, or why you don’t, you know, have something more significant to say at a historic moment like this?”

Chester A. Newland, a professor of public administration at the University of Southern California, maintains that “OPM, which is already cut down to where it’s almost a toothless Chihuahua, will really amount to nothing” after the changes have been made.

Reduction in Force. In GAO’s assessment, the legislation would allow the Department of Defense to revise reduction-in-force (RIF) rules to place greater emphasis on employee performance.

House Del. Eleanor Holmes Norton, a Democrat of the District of Columbia, said she knew from personal experience the undesirability of seniority and tenure as the basis for force reductions. “But why do people go to tenure?” she asked. “They go to tenure because, in 100 years of the Civil Service, nobody has been able to come up with anything other than arbitrary ways to ... lay off people.”

Chu replied, “We shrank the armed forces—the uniformed forces of the United States—by several hundred thousand people in the early years of the 1990s, and we did it with a non-tenure system. We did it with a system that was performance-oriented.”

For its part, AFGE said that changing the rules for RIFs would mean just this: “Supervisors could pick and choose.”

What About Outsourcing?

Lurking in the background of the debate is the question of outsourcing.
Federal departments and agencies have identified 850,000 government jobs—about half of them in the Defense Department—that could potentially be put out for bid to private contractors, prompting union leader Harnage to say the Administration had “declared all-out war on federal employees.”

The interim goal of the Office of Management and Budget is to outsource 15 percent of these positions by July 2004.

Wolfowitz, in testimony on the transformation act, said, “This bill doesn’t address the issue of outsourcing. It’s a major concern that’s obviously in separate actions in legislation. We are seeking authority to outsource those things that we think are not appropriate for federal employees.”

Rumsfeld told Congress in February, “There is no reason ... that the Defense Department should be in the business of making eyeglasses, when the private sector makes them better, faster, and cheaper.”

The unions have taken this as a threat, but Rumsfeld’s proposal indicates that he wants to change the Civil Service, not dismantle it. He has been under fire constantly for his refusal to increase the military strength of the armed forces. He agrees the troops are stretched too thin, but argues that the problem can be relieved by transferring military support jobs to civilians, either government employees or contractors.

“ Consider: We have more than 300,000 uniformed personnel doing jobs that should be done by civilians,” Rumsfeld said in an op-ed column in the Washington Post May 22. “That means that nearly three times the number of troops that were on the ground in Iraq during Operation Iraqi Freedom are doing nonmilitary jobs that should be done by civilian personnel.”

A big reason for that, he said, is that, under the present system, it is not possible to manage civilian employees, put them in jobs, give them guidance, and transfer them from one task to another and adjust to requirements in the way it can be done with military people and contractors.

That, in considerable part, is what the reform package is all about.

In his op-ed column, Rumsfeld also took note of Skelton’s observation that Goldwater–Nichols took years to pass.

“ We do not have four years to wait before we transform,” Rumsfeld said. “Our enemies are watching us—studying how we were successfully attacked, how we are responding, and how we may be vulnerable again. In distant caves and bunkers, they are busy developing new ways to harm our people. ... And they are not struggling with bureaucratic red tape fashioned in the last century as they do so.”