Examining OMB's Memorandum on the Federal Workforce

6/15/2017

Senate Committee on Homeland Security and Governmental Affairs Subcommittee on Regulatory Affairs and Federal Management

Chairman Lankford, Ranking Member Heitkamp and members of the Subcommittee, thank you for allowing NTEU to share its thoughts on the Administration’s plans to reorganize the federal government. As National President of NTEU, I represent over 150,000 federal employees in 31 agencies and I appreciate the opportunity to discuss this important issue.

As the Subcommittee is aware, on April 12, 2017, the Office of Management and Budget (OMB) issued agency guidance on how to fulfill the requirements of both the January 23, 2017, Presidential Memorandum imposing a hiring freeze and the March 13, 2017, Executive Order directing OMB to submit a comprehensive plan to reorganize federal agencies while aligning those initiatives with the President’s March 16, 2017, Fiscal Year (FY) 2018 Budget Blueprint. This guidance requires all agencies to:

Begin taking immediate actions to achieve near-term workforce reductions and cost savings, including planning for funding levels in the President's FY 2018 Budget Request;
Develop a plan to maximize employee performance by June 30, 2017; and
Submit an Agency Reform Plan to OMB in September 2017 as part of the agency's FY 2019 Budget submission to OMB that includes long-term workforce reductions.

With the issuance of this new guidance, the government-wide hiring freeze for federal agencies was lifted and in its place, agencies were told to adhere to the principles, requirements, and actions laid out in the new guidance when hiring new employees. It is also important to note that agencies, such as the Environmental Protection Agency, continue to operate under a virtual hiring freeze. At the same time, the memo noted that the President’s FY 2018 Budget request would propose decreasing or eliminating funding for many programs across the Federal government, and in some cases, redefine agency missions, which should drive agencies’ planning for workforce reductions and inform their Agency Reform Plans. OMB and the Office of Personnel Management (OPM) were designated to help facilitate reductions and monitor progress.

In addition, OMB laid out a series of guidelines for determining how to eliminate positions in the long term. Specifically, OMB urged agencies to use data-driven workforce planning; to consider consolidating higher-grade positions and downgrading management-level positions; to ensure that they have the fewest amount of management layers needed to provide for appropriate risk management, oversight and accountability; to eliminate redundancies; and to review positions as they become vacant to ensure they are relevant and reflect current mission needs.

While some reforms require congressional action, others are able to be implemented more quickly and without Congress. OMB Director Mulvaney has encouraged agencies to begin eliminating unnecessary vacant positions immediately, but, outside of the Budget request, stated that it will not prescribe specific targets for cuts. In the meantime, OPM is working to provide streamlined templates to enable agencies to request Voluntary Early Retirement Authority (VERA) and Voluntary Separation Incentive Payments (VSIP), or buyouts, that enable OPM to approve the requests within 30 days.

NTEU is in favor of improving the efficiency and effectiveness of federal agencies to ensure that they are providing the services that Americans rely upon and that taxpayer dollars are spent wisely. However, we are deeply concerned with agencies being directed to make reductions in the workforce, based only on proposed budgets that do not have congressional approval, which will drastically impact the ability of agencies to meet their missions. Additionally, it is our fear that staffing reductions of federal employees are being proposed with the aim of outsourcing agency functions and services, that, based on past experience, will only cost taxpayers more money, not less, and will provide the public with less transparency and accountability.

Agencies Consulting with Employee Representatives

As I stated previously, NTEU supports efforts to make federal agencies more effective and efficient. However, we believe that reform efforts should not take place in a vacuum. Senior agency officials and new political appointees do not have all of the relevant information or ideas on where to focus reform efforts. Rather, we believe that only by having senior officials working closely with front line employees and their representatives will real positive reform take place. Front-line federal employees and their union representatives are an essential source of ideas and information about the realities of delivering government services to the American people.

In 2009, President Obama issued Executive Order 13522, Creating Labor-Management Forums to Improve Delivery of Government Services. As E.O. 13522 makes clear, predecisional involvement (PDI) is an important component of the implementation of labor management forums, and therefore calls for agencies to involve employees and their union representatives in pre-decisional discussions concerning all workplace matters to the fullest extent practicable. Front-line employees and their union representatives have essential ideas and information about delivering quality government services to the public and the PDI process allows employees, through their labor representatives, to have meaningful input resulting in better quality decision-making, more support for decisions, timelier implementation, and better results for the American people.

According to the October 2014 Labor-Management Relations in the Executive Branch report, there are numerous examples of where PDI and employee engagement efforts have been successful. For example, the Patent and Trademark Office used PDI in reorganizing around line workers by involving labor representatives, including NTEU, in the decision-making process before management determined how to proceed. As a result, PTO reduced the patent application backlog by 31 percent and the trademark application processing time from 13.4 months to 10 months while applications continued to increase every year. Through constant engagement with labor representatives, PTO’s Global Satisfaction Index score increased from 56 percent to 82 percent, from 2006 to 2013. It also has improved in the Partnership for Public Service’s Best Places to Work in the Federal Government rankings from #172 to #1 out of 300 agency subcomponents in that same time period. Since the Federal Employee Viewpoint Survey began to include an Engagement Index in 2010, that PTO’s score in that area increased from 71 percent to 82 percent. I see no reason why similar success cannot be had with this new government-wide reform effort.

On May 15, 2017, I met with OMB Senior Advisor Linda Springer and discussed our desire to be part of reorganization planning and that our chapter leaders were already soliciting reform recommendations from our members. However, to date we have not heard back from OMB regarding NTEU’s request to have OMB counsel agencies to reach out and involve frontline employees. We fear that such reform efforts without employee involvement will fail; adversely impacting the morale of the federal workforce as well as the services we provide to the American people. I urge the Subcommittee to encourage agencies to work in a meaningful way with their employees in developing their reform plans.

Ratio of Supervisors to Frontline Personnel

According to the OMB memorandum, as part of their reform plans, agencies are to consider consolidating higher-grade positions, downgrading management-level positions, and ensuring that they have the fewest amount of management layers needed to provide for appropriate risk management, oversight and accountability. Unfortunately, to date, we have seen two agencies that have developed plans that go in the opposite direction.

For example, Customs and Border Protection (CBP) at the Department of Homeland Security continues to be a top-heavy management organization. In terms of real numbers, since its creation, the number of new managers has increased at a much higher rate than the number of new frontline CBP hires. CBP’s own FY 15 end of year workforce profile (dated 10/3/15), shows that the supervisor to frontline employee ratio was 1 to 5.6 for the total CBP workforce, 1 to 5.7 for CBP Officers, and 1 to 6.6 for CBP Agriculture Specialists. Prior to 2003, supervisor to frontline ratio was closer to 1 supervisor to 12. It is also NTEU’s understanding that nearly 1,000 CBP Officers are serving either at CBP headquarters or non-Office of Field Operations locations. This means that nearly 4,000 CBP Officers are serving in supervisory positions.

The tremendous increase in CBP managers and supervisors has come at the expense of border security preparedness and frontline positions. Also, these highly paid management positions are straining the CBP budget. CBP’s top heavy management structure contributes to the lack of adequate staffing at the ports, excessive overtime schedules and flagging morale among the rank and file.

In another example, NTEU has learned that the Farm Service Agency at the United States Department of Agriculture (USDA) plans to reorganize its Office of Budget and Finance. On May 15, 2017, USDA submitted a reorganization proposal to the Senate Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies, for approval. This reorganization produces a higher manager to employee ratio than OPM recommends. The manager to employee ratio in this reorganization is 1 to 5, instead of OPM’s recommendation of 1 to 11. NTEU was only provided a copy of this plan after it was submitted to the Subcommittee for approval. Nonetheless, we suggested to USDA that the reorganization be revised to consolidate units where the manager has less than 5 employees reporting to them in order to bring the manager to employee ratio at least somewhat closer to OPM’s staffing recommendation. We were told that the structure of the units is a management right, and that USDA would not discuss it with the union. We sent a letter to Senate Appropriations Subcommittee Chairman Hoeven on May 30, 2017, regarding this matter and have attached it to this testimony.
As concerned citizens and in light of the President’s desire to look into reducing the layers of management within government, we would strongly suggest Congress review the manager to employee ratio within agency reform plans and encourage agencies to work with their employees in making decisions on agency reform efforts.

Concerns Over Outsourcing

One of the major concerns NTEU has with the reorganization efforts taking place in federal agencies is that such plans will lead to increased outsourcing of government functions. In fact, the OMB Reorganization Memorandum states that agencies should consider leveraging outsourcing to the private sector when the total cost would be lower. It also states that agencies should consider government-wide contracts for common goods and services to save money and free-up acquisition staff to accelerate procurements for high-priority mission work.

NTEU has long maintained that federal employees, given the appropriate tools and resources, do the work of the federal government better and more efficiently than any private entity. When agencies become so reliant on federal contractors, the in-house capacity of agencies to perform many critical functions is eroded, jeopardizing their ability to accomplish their missions. It has also resulted in the outsourcing to contractors of functions that are inherently governmental or closely associated to inherently governmental functions.

Over the years, we have seen at agencies delivering vital services, contractors perform critical and sensitive work such as law enforcement, government facility security, prisoner detention, budget planning, acquisition, labor-management relations, hiring, and security clearances. According to the Government Accountability Office (GAO), the Department of Homeland Security has used contractors to prepare budgets, develop policy, support acquisition, develop and interpret regulations, reorganize and plan, and administer A-76 efforts.

One of the most egregious examples of the outsourcing of inherently governmental functions was the 2006 IRS private tax collection program. The program, under which private collection agencies were paid to collect taxes on a commission basis, was an unmitigated disaster. The program resulted in a net loss of almost $5 million to the federal government and lead to taxpayer abuse. Further, at one juncture in the program, the IRS had to assign 65 of its own employees to oversee the work of just 75 private collection agency employees. Given the obvious failures of this undertaking, and in the face of strong opposition by NTEU and a broad range of consumer and public interest groups, Congress voted to cut off funding for the program. Then, in March 2009, after conducting a month-long, comprehensive review of the program, including the cost-effectiveness of the initiative, the IRS announced it was ending the program. Yet, Congress reinstated the program in late 2015 to offset the costs of the long-term highway funding bill, and NTEU remains highly concerned by the use of private collection agencies, which not only are costly to taxpayers, but run the risk of exposing the public to scam artists.

The aggressive targeting of federal jobs for public-private competition is not new. During the Administration of President George W. Bush, competitive sourcing was one of its top initiatives. As part of their efforts, we saw the rules of competition overhauled, quotas set for competed jobs, and grades given to agencies on their efforts in conducting competitions. The changes undoubtedly had the desired effect: between 2000 and 2008, spending on contracting doubled, since 2001, reaching over $500 billion in 2008. The explosion in contract spending also led to a drastic increase in the size of the contract workforce in addition to waste, fraud and abuse.

The Obama Administration, noting several issues with the A-76 process, instilled a moratorium on outsourcing while it looked to improve the competitive process. I urge this Subcommittee to ensure that the current A-76 moratorium be continued. In addition to the concerns with the A-76 process and issues with cost overruns and proper contractor oversight, ethical issues are also of concern as contractor employees are working for the benefit of their employer company—not the benefit of the American people. Such initiatives also have a demoralizing impact on the existing federal workforce as they wonder if their job is the next to be outsourced.

By ensuring that the outsourcing process is fair and that federal employees are able to compete for work with contractors on an even playing field, federal agencies will be better able to provide high quality services and will save taxpayer dollars and achieve the goals for the OMB Memorandum.

CONCLUSION

Ensuring the efficiency and effectiveness of federal agencies is a goal that we all share. However, in looking to implement reforms to do so, it is important that front-line federal workers have a meaningful seat at the table and can share their perspectives and knowledge of agency programs and functions. Thank you again for the opportunity to share my views with you today.