TYPE: COMMITTEE HEARING

LENGTH: 19700 words

COMMITTEE: MILITARY READINESS SUBCOMMITTEE OF THE HOUSE ARMED SERVICES

HEADLINE: U.S. REPRESENTATIVE HERBERT BATEMAN (R-VA) HOLDS HEARING WITH THE CIVIL SERVICE SUBCOMMITTEE OF THE HOUSE GOVERNMENT REFORM COMMITTEE ON CIVILIAN PERSONNEL READINESS

LOCATION: WASHINGTON, D.C.

BODY:
HOUSE ARMED SERVICES COMMITTEE'S SUBCOMMITTEE ON MILITARY

READINESS HOLDS A JOINT HEARING WITH HOUSE GOVERNMENT REFORM

COMMITTEE'S SUBCOMMITTEE ON CIVIL SERVICE ON CIVILIAN

PERSONNEL READINESS


MARCH 9, 2000


SPEAKERS:

ARMED SERVICES COMMITTEE:

U.S. REPRESENTATIVE HERBERT H. BATEMAN (R-VA), CHAIRMAN

U.S. REPRESENTATIVE SAXBY CHAMBLISS (R-GA)

U.S. REPRESENTATIVE WALTER B. JONES, JR. (R-NC)

U.S. REPRESENTATIVE BOB RILEY (R-AL)

U.S. REPRESENTATIVE DUNCAN HUNTER (R-CA)

U.S. REPRESENTATIVE JAMES V. HANSEN (R-UT)

U.S. REPRESENTATIVE CURT WELDON (R-PA)

U.S. REPRESENTATIVE TILLIE K. FOWLER (R-FL)

U.S. REPRESENTATIVE JAMES M. TALENT (R-MO)

U.S. REPRESENTATIVE TERRY EVERETT (R-AL)

U.S. REPRESENTATIVE JIM GIBBONS (R-NV)

U.S. REPRESENTATIVE DON SHERWOOD (R-PA)


U.S. REPRESENTATIVE SOLOMON P. ORTIZ (D-TX), RANKING MEMBER

U.S. REPRESENTATIVE NORMAN SISISKY (D-VA)

U.S. REPRESENTATIVE JOHN M. SPRATT, JR. (D-SC)

U.S. REPRESENTATIVE OWEN B. PICKETT (D-VA)

U.S. DELEGATE ROBERT A. UNDERWOOD (DEL-GU)

U.S. REPRESENTATIVE ROD BLAGOJEVICH (D-IL)

U.S. REPRESENTATIVE ADAM SMITH (D-WA)

U.S. REPRESENTATIVE JAMES H. MALONEY (D-CT)

U.S. REPRESENTATIVE MIKE MCINTYRE (D-NC)

U.S. REPRESENTATIVE CIRO D. RODRIGUEZ (D-TX)


GOVERNMENT REFORM COMMITTEE:

U.S. REPRESENTATIVE JOE SCARBOROUGH (R-FL), CHAIRMAN

U.S. REPRESENTATIVE ASA HUTCHINSON (R-AR)

U.S. REPRESENTATIVE JOHN MICA (R-FL)

U.S. REPRESENTATIVE CONNIE MORELLA (R-MD)

U.S. REPRESENTATIVE DAN MILLER (R-FL)


U.S. REPRESENTATIVE ELIJAH CUMMINGS (D-MD)

U.S. REPRESENTATIVE ELEANOR HOLMES-NORTON (DEL-DC)

U.S. REPRESENTATIVE THOMAS ALLEN (D-ME)


FRANK CIPOLLA, DIRECTOR, CENTER FOR HUMAN RESOURCES

MANAGEMENT, NATIONAL ACADEMY OF PUBLIC

ADMINISTRATION


MICHAEL BROSTEK, ASSOCIATE DIRECTOR, FEDERAL MANAGEMENT

AND WORKFORCE ISSUES, U.S. GENERAL ACCOUNTING

OFFICE


BARRY HOLMAN, ASSOCIATE DIRECTOR, DEFENSE MANAGEMENT

ISSUES, U.S. GENERAL ACCOUNTING OFFICE


DR. DIANE M. DISNEY, DEPUTY ASSISTANT SECRETARY OF DEFENSE (CIVILIAN PERSONNEL POLICY)


DAVID L. SNYDER, DEPUTY ASSISTANT SECRETARY OF THE

ARMY (CIVILIAN PERSONNEL POLICY)


BETTY S. WELCH, DEPUTY ASSISTANT SECRETARY OF THE NAVY

(CIVILIAN PERSONNEL/EEO)


MARY LOU KEENER, DEPUTY ASSISTANT SECRETARY OF THE AIR

FORCE (FORCE MANAGEMENT AND PERSONNEL)


DAVID O. COOKE, DIRECTOR OF ADMINISTRATION AND

MANAGEMENT, OFFICE OF THE SECRETARY OF

DEFENSE


*

BATEMAN: The hearing will come to order.


Our colleagues from the Civil Service Subcommittee of the Government Reform Committee joined us today for the first combined hearing of these two subcommittees, at least, within my memory.


I particularly welcome Congressman John Mica of Florida who is substituting for Chairman Scarborough in view of Chairman Scarborough's illness.


I'm also pleased to welcome the ranking member, Mr. Cummings, and the other members of the subcommittee as partners in our effort to oversee the Department of Defense management of its civilian personnel workforce.


I recognize that many of the civilian personnel provisions we include each year in our Defense Authorization bill come within the jurisdiction of the Civil Service Subcommittee. And you've always been most cooperative and generous in your assistance to us.


The joint hearing provides our witnesses a unique opportunity to discuss issues before both committees of jurisdiction. One of the primary reasons we scheduled this hearing is to discuss the effect of the civilian drawdown on the Department of Defense civilian workforce and ultimately, its affect on the readiness of our military forces.


Few Americans understand that the Department of Defense has reduced its civilian workforce by more than 38 percent over the past 10 years compared with a 35 percent reduction in active duty military forces. Many, many skilled workers across the country and overseas have left the Department of Defense employment permanently.


I am also concerned that these rather dramatic reductions have occurred in such a way that the Department released needed personnel who possessed essential skills. It is time to examine our civilian work force to ensure that we will have the people with the skills we need in the future.


In that regard, I would like our witnesses to provide the subcommittee an assessment of their current skills inventory, and what additional tools they may need, if any, to properly align the workforce of their respective service.


Additionally, I would like some assurances that the Department of Defense and the military services have planned for the future. In other words, do they have a template for the skills and the workers needed to support future operations so that younger workers can begin to be hired and trained now to meet those future needs? If you do not have a clear vision of where you need to go, it is difficult for this committee to intelligently address issues and implement solutions.


In addition, we'll continue to listen to your concern about the Department's aging workforce, as an increasing number of workers are eligible to retire. The question is, will you need their skills when they do retire and do you have someone in the pipeline to fill those essential positions? I would expect that some very careful analysis has been done before you ask our two subcommittees to consider measures changing long-established personnel policies to solve a problem that so far, has not been demonstrated or proven.


Finally, over the years, the Department has requested and received authority to operate a variety of civilian personnel demonstration projects. I would like to hear what has been learned from the existing demonstrations.


From the reactions we get back home when base closures are considered or reductions in force are announced, it is apparent that federal jobs are still highly coveted. Therefore, it seems counterintuitive that we would have difficulty hiring new workers. That is why I would like to see some careful analysis behind any request for new authorities, and I would insist that any new authorities be carefully targeted at skills the Department has demonstrated that it cannot hire. For example, the Air Force reports having difficulty hiring engineers. The Army has a different experience. Why is that?


Today, the subcommittees will hear testimony from experts in workforce shaping issues from the civilian personnel policy directors of the Department.



BATEMAN: It is my belief that our hearing today will assist us in making the necessary decisions for our civilian workforce in the future.


Before proceeding to our witnesses, let me now recognize the gentleman from Florida, Mr. Mica, for his opening remarks.


MICA: Well, thank you, Mr. Chairman.


I appreciate this opportunity to join you and members of your subcommittee at this hearing this afternoon.


I look forward to working with you and also the Civil Service Subcommittee, Chairman Scarborough, who unfortunately cannot be with us today because of his injury. And I'm pleased to join also, ranking members Ortiz and also, Mr. Cummings. Mr. Cummings has also been ranking on Civil Service and very active in these issues. It's particularly important that we have leaders like this as we address the issues of civilian personnel readiness.


This is a vitally important matter, Mr. Chairman, and I commend you for initiating this inquiry. As the former chairman of the Civil Service Subcommittee, I also want to thank you for the cooperation my staff and I have received from you and your staff on civilian personnel issues in the past Congresses. I'm confident that the close working relationship will continue as evidenced today by this joint hearing.


Today, we'll examine the state of readiness of civilian workforce that supports our service men and women. This hearing is really the beginning of a process that will continue as our subcommittees work through a variety of civilian workforce proposals in conjunction with this year's civilian -- with this year's Defense Authorization bill. I look forward to hearing the witnesses today, all of whom bring a great deal of expertise on these civil service issues and civilian defense issues.


Mr. Chairman, there are several matters that I ask the Department of Defense and others to address as we consider the readiness issue today and throughout the remainder of this congress. One, is the key -- one key issue is the effect of the dramatic reduction in civilian personnel that the Department of Defense, which you referred to in your opening statement, and also that and all of our military departments. Again, putting that reduction in perspective, Mr. Chairman, the drop of a full-time equivalent employment at those agencies will account for 73 percent of the net personnel reduction government-wide by the end of FY 2001.


We need to know, Mr. Chairman, how this drawdown has affected the ability of our current workforce to support America's military forces now. If there are critical short-term problems that must be addressed now, the witnesses should identify them and provide us with concrete proposals for dealing with them.


Mr. Chairman, we've heard a lot about the threat of a hollow military and this Congress has taken steps to turn that problem around. America must always have the best fighting forces in the world. The men and women in our armed forces must be the best-trained that we know and the best-equipped. But an inadequate civilian support system will degrade the performance of even the best military force in the world. That's why we also need to be concerned about a hollow support system.


Together with the administration and everyone on both sides of the aisle, we must determine the optimum mix of skills and the optimum mix of contractors and employees needed to preserve our nation's strength and security.


As we look to the future, Mr. Chairman, it's important that Congress make certain the Department of Defense and the military departments are integrating civilian workforce planning with the military's strategic planning. Until we know what kind of military missions and forces we must plan for, neither the Congress nor the administration can reasonably begin assessing our civilian workforce needs.


I will expect today's witnesses to demonstrate that their civilian personnel strategies are, in fact, solidly tied to anticipated military needs. I will also expect a clear explanation of why such things as an older workforce are considered problems and not simply facts or experienced personnel to deal with. And I also want to know what agencies are doing and plan to do to train, where necessary, re-train their existing employees.


Another key issue that I'd like our witnesses to address, is whether today's civilian benefit structure should be modified to attract highly qualified and motivated individuals. Do we need more flexible benefits and more portable retirement systems to help us compete for highly skilled workers, particularly younger workers who do not necessarily plan to make their careers with just one employer?


And I'm pleased to see, also, the gentleman from Virginia here that I have worked with in the past in trying to bring us into the 21st century in that regard. I appreciate his efforts and sorry to see him retiring and you retiring and anyone else who's retiring that's done such a good job towards these efforts.


So, Mr. Chairman, I'll look forward to receiving answers to these questions and working with you in this joint effort today.


BATEMAN: Thank you very much, Mr. Mica.


And now, I'd like to recognize my good friend and the ranking Democratic member of the Readiness Subcommittee, Solomon Ortiz of Texas.


ORTIZ: Thank you, Mr. Chairman, for agreeing to hold this hearing today. And of course we're happy to have our colleagues with us.


This is the first civilian personnel readiness we have conducted in quite some time. It does not mean that we have not been enacting legislation impacting on the matter during this time. It is more of a case of the absence of an opportunity to look at civilian personnel policies and practices in an integrated manner.


I join you in welcoming all of our witnesses here today. I also appreciate the opportunity to explore this important issue with our colleagues on the Civil Service Subcommittee of the Government Reform Committee.


Mr. Chairman, for there are many civilian personnel issues that loom before us, I am very much concerned with the problem that challenges and challenges associated with a dwindling and an aging workforce. I have also heard some of my colleagues express their concerns about these matters.


During preparation for this hearing, I was reminded that the United States will reportedly be the last of the developed nations to experience the aging of its population. By 2025, nearly 18 percent of all Americans will be over the age of 65. This aging population not only affects the demands for funds for non-defense activities, it also impacts on the quantity and quality of civilian personnel we will be able to attract and to retain to meet the Department's technical and management challenges.


I am most familiar with the situation at Corpus Christi Army Depot, where today, there are no employees under the age of 30. The significance of these facts is that is easier for a 30-year-old to climb around an airframe in the (inaudible) degree heat of South's summer, than it is for a 50- to 60-year-old. And I can vie for that.


From my study of the Army Material Command civilian personnel status, I found that in six critical career programs, 72 percent of the workforce is over 40 and 35 percent is above age 50. Today, the average is 48.7. By the year 2004, some 50 percent of the Army Material Command civilian workforce will be retirement eligible. I think those statistics by themselves tell us a lot.


Notwithstanding the current trend toward outsourcing privatization of functions that have traditionally been performed by DOD civilians, the promised increased reliability of new equipment and the innovative (inaudible) of management concept that we hear about, I am convinced that there will always be a need for a core DOD civilian workforce. I am not certain that the department is in the best posture at this time to prepare for the future while there is still time.


It is not the same in DOD as it is in some sectors of the Department of Energy. In the Department of Energy, we are scrambling to capture the experiences of personnel who work nuclear weapons issues before they disappear.


But the impact could be the same if we do not take the steps necessary to make sure that we have in place the right policies and programs to meet our future civilian workforce requirement.


I know that we have had programs in existence for some years to design, to attract, train and retain white-collar employees. And the department tells me that those programs have been useful. But when I inquire about blue-collared technical employees, I find a different story. Some of the skills needed require long lead times to produce these highly trained technicians we need to maintain the increasingly complex equipment we are procuring. Some of the same skills are required to maintain the legacy equipment that we will retain in the inventory for some time.


It is my assessment that we just do not have sufficient programs in place to meet future requirements. It is for that reason, I am proposing that the Department of the Army conduct a pilot apprentice program at Army depots that will address the future needs for some already known, hard to find blue-collar technicians.


The Army Material Command has provided a detailed listing of what skills are wanting, depot by depot. The outcome of this program will be useful in assessing the strategies designed to solve this problem in other places in the department.


Mr. Chairman, there are some tasks that I am convinced must be accomplished sooner, rather than later. We have to understand the potential implications of aging population on national security. We need to better understand what are our future workforce requirements, so that appropriate policies and plans can be put in place to address the totality of the problem.


There is a need to understand the impact of the drawdowns on productivity as well as our ability to attract and retain the quality and quantity workers that we need. We need to understand the linkage between the perceived problem and the separate piece of legislation we have enacted in the department's policies and practices.


We need to develop legislation, if needed, to provide the tools needed to properly shape the workforce. We need to understand the cost so that we can ensure that in integrated investment strategy is developed and in place to guide the implementation of rational and achievable civilian personnel goals. This is not a case of mission impossible. And I know it is not something that can be accomplished without considerable effort, but it must be done. We must make the investment or we will not provide for the future workforce capable of meeting technical and management challenges, all to the detriment of readiness.


Mr. Chairman, I thank you for your sight and for your vision. And thank you for holding this hearing today.


Thank you, Mr. Chairman.


BATEMAN: Thank you, Mr. Ortiz.

And now, I'm pleased to recognize the ranking member of the Civil Service Subcommittee, Mr. Elijah Cummings of Maryland.


CUMMINGS: Thank you very much, Mr. Chairman and ranking member Ortiz, of the Military Readiness Subcommittee and certainly to Mr. Mica and Chairman Scarborough of our Civil Service Committee. I really do appreciate you scheduling this hearing.


This hearing sends a message to federal agencies that it is important to plan for the future and develop a strategic approach to manage, train, retain, develop, hire, pay and evaluate their most valuable assets, its employees.


As ranking member of the Civil Service Subcommittee, I'm aware of the impact of downsizing, contracting out, reductions in force and an aging workforce can have on employees and the management of employees. Morale suffers due to limited career and promotion opportunities. People become insecure about their jobs and are forced to work longer hours to accomplish the same amount of work. When this occurs, not only do employees suffer, but the agency and its mission do as well. This situation is exacerbated in the case of the Department of Defense.


In 1996, the Government Accounting Office reported that between the years of 1987 and 1995, DOD reduced its civilian workforce by approximately 25 percent or about 284,000 personnel. GAO noted that by the time DOD finishes its downsizing plans in fiscal year 2001, DOD would have reduced its civilian workforce to about 728,300 personnel, almost 35 percent below the 1987 end-strength and about 16 percent below the 1995 end-strength.


When the GAO report was issued, DOD reported that civilian downsizing had not adversely affected military readiness at the installations visited by GAO. However, DOD did state that if not managed properly in the future, civilian downsizing could have an adverse effect on combat units.


I look forward to hearing from DOD as to the current status of its downsizing efforts, its impact on civilian employees and its strategic plan to manage its workforce in the future.



CUMMINGS: Any testimony the other witnesses can offer to help us understand this issue is most appreciated.


Thank you very much.


BATEMAN: Thank you, Mr. Cummings.


At this point, I'd like to ask unanimous consent to have Chairman Scarborough's statement made a part of the record.


Now, I'd like to welcome our first panel of witnesses who are expert in the work-shaping issues that we are principally concerned with today.


The first panel consists of Mr. Frank Cipolla, Director of the Center for Human Resources Management of the National Academy of Public Administration; Mr. Michael Brostek, Associate Director, Federal Management and Workforce Issues for the General Accounting Office who is accompanied by Mr. Barry Holman, Associate Director, Defense Management Issues of the General Accounting Office.


Gentlemen, we welcome you. All of your written statements will be made a part of the record.


And now, Mr. Cipolla, I'll call on you to proceed as you may choose.


CIPOLLA: Thank you, Mr. Chairman.


We, as you mentioned, did submit a detailed statement for the record, so at this time, I'd like to just give a brief oral summary.


We appreciate the opportunity to appear today to discuss civilian personnel readiness.


The National Academy of Public Administration is an independent, non-profit, non-partisan organization chartered by the Congress to improve governance. And we hope to be able to provide some outside DOD perspectives on this issue, which is of extreme importance now to most federal agencies, including DOD.


I would like to, before I proceed, acknowledge the presence today of the newly appointed president of the National Academy, someone you know, I know, Mr. Robert O'Neill (ph), who is here in the audience.


BATEMEN: Congratulate the Academy on its choice and very, very pleased to see my friend, Bob O'Neill (ph) again.


CIPOLLA: Thank you, sir.


We have been putting a good deal of priority on this subject of workforce planning and workforce shaping and a good bit of our recent work has included a number of subjects that are relevant to this hearing.


I've included a listing of several recent studies and reports on these subjects. I can make those available for the record, if you wish.


BATEMAN: We'd be pleased to have them.


CIPOLLA: Good. We'll do that.


Some background -- civilian personnel readiness is an important subject, as I mentioned, not just for DOD, but certainly including DOD. Projecting the role and the composition of the civilian component of the total of the total force is a continuing challenge, even more so as agencies look ahead and attempt to build the workforce from where downsizing and restructuring left it.


There is no doubt that the task faced by DOD and its components to assure that the right people are in the right place at the right time, is more daunting than ever. They are searching for answers to questions about what civilians will be doing, what is the right civilian-military mix, what are the competencies or skill sets that will be needed, how will the skills and knowledge of the current workforce be updated, what is the best approach to recruiting for scarce skills, and what needs to be done to retain senior-level expertise in key occupations.


Most federal agencies are facing these or similar questions after spending the better part of the last decade trying to manage downsizing, keeping the adverse impact on people to a minimum, and working to get maximum productively from the workforce that is left, all while still adhering to merit principles that have been the foundation of federal employment since 1883. Federal managers now find themselves in a "war for talent," trying to compete in a tough market and making decisions about human capital investment. Government and the private sector alike are discovering that they can't address these questions in a rational and defensible way without instituting a systematic process of workforce planning. Last year, the Academy looked at 17 federal agencies and found that most of them were beginning to do that.


I'd like to share some of that information, along with primarily some key conclusions about this subject. And I'll just state those at this point and then if you have questions, I'd be happy to comment on them. They're detailed in the in the prepared statement.


The first of those is that workforce requirements must be linked to the agency's overall strategic plans. That's already been said in a number of ways, but we can't over-stress that point. Agency strategic plans must have a people component, that needs to be part of the process.


The second point is that workforce planning must include the collection and analysis of data about the external environment as well as information about the current workforce. We've already heard some of those trends that are going to be shaping, already shaping the workforce and the workplace over the next five to 10 years: skill shortages, increasing age of the workforce, increasing retirement eligibility, the workforce becoming more diverse, technology making possible alternative work arrangements, and the newer generations of employees having different values and expectations about work in the workplace.


The third point is that projections of future workforce requirements must be expressed in terms of needed skills and competencies, not just numbers of full-time permanent employees.


Fourth, decisions on the composition of the future workforce should consider the use of flexible employment arrangements. Increasingly, the right people for getting the job done in the future will be a mix of workers and a mix of employment arrangements.


Fifth, managers must be given maximum flexibility in managing work and assigning staff to meet changing mission and program requirements. The civilian personnel system, to the extent that it is possible, must accommodate the requirement for that flexibility.


Sixth point, human capital development and continuous learning should be viewed as an organizational investment and given a high strategic priority. Federal agencies need to transform training programs into an ongoing process of re-skilling and re-tooling the workforce to acquire and maintain the competencies needed to keep up the with the changes in mission technology and the content of work itself.


And the seventh and final point relates to retirement incentives. Retirement incentives should be used selectively to support restructuring and to retain needed talent in scarce skill occupations. And we could elaborate on that, but I think I've completed my time.


I'd be happy to answer any questions you have.


BATEMAN: Thank you very much, Mr. Cipolla.


And now, we'd be very pleased to hear from Mr. Brostek.


BROSTEK: Thank you, Mr. Chairman.


I'm pleased to be here to discuss why this is an opportune time to assess human capital management at the Department of Defense and a self-assessment check-list that GAO has developed to help agency leaders focus on improving the management of their workforce.


My observations on DOD's human capital management situation are based on work we have done at DOD throughout the 1990s that provide us some perspectives on the issues that have arisen during downsizing, but do not present a comprehensive assessment of workforce planning at the Department of Defense.


However, in summary, several factors suggest that this is an important time for DOD to assess its human capital practices. Public and private high-performance organizations recognize that people are their key asset. It is through the talents and dedicated work of staff that missions get accomplished. Therefore sound management calls for continually reassessing human capital management, especially in a dynamic environment, and surely, DOD is in a dynamic environment.


DOD's workforce, as has been mentioned, is about 36 percent smaller now than it was in 1989 and it's likely to get smaller. In part, due to these reductions, imbalances exist in the age distribution of DOD staff. The average age of civilian staff has been increasing, while the proportion of younger staff, who are the pipeline of future talent and leadership has been dropping.


DOD reform initiatives are also changing the way the department does business and new business practices affect the competencies that employees must have. Together, these changes suggest that DOD faces challenges in ensuring that it will have the talented workforce that it needs in the next decade.


To help agencies assess their human capital management and to deal with these challenges, we developed a five-part assessment framework that we believe can be useful in aligning human capital management with agencies' missions, goals and strategies. I'll talk very briefly about each portion of that framework.


The first part starts with strategic planning because decisions made today determine whether an agency will have the workforce that it needs in the future. A workforce cannot be reshaped overnight. For instance, if an agency's strategic plan calls for a greater reliance on information technology, there are implications for the competencies that the workforce will need. The actions needed to reshape the workforce, such as training, hiring employees with requisite skills and possibly separating employees whose skill sets are no longer well matched to agency needs must be carefully designed and implemented.


Next, our framework calls for aligning an agency's human capital policies and practices to support the agency's strategy. This is where detailed workforce planning is done. Looking at the strategies for five years or more into the future, the agency defines the knowledge skills and abilities that employees will need, as well as how many employees will be needed at that time.


Those knowledge skills and abilities are then assessed in the current workforce and projections are done of workforce attrition due to things like retirement and resignations and other factors. Then the gap needs to be assessed between these skills and abilities and size of the current workforce and the similar qualities of the workforce in the future. Once that gap measurement has been made, an agency is finally prepared to actually develop a plan to transition its current workforce to that which it's going to need in the future.


The third part of our framework emphasizes that agencies must pro-actively develop their future leadership. The agency must begin by determining the qualities and characteristics that are most needed in its future leaders. Leaders develop over long periods of time and therefore, agencies need to identify potential leaders early and provide them with a variety of professional development and learning opportunities throughout their careers.


The fourth element of the framework focuses on ensuring that agencies recruit, develop and retain the employees with skill necessary to support mission accomplishment. In a sense, this the execution of the workforce plan. The workforce plan identified the types and numbers of employees needed. At this point, agencies need to go out and identify by targeting the individuals that have the skills and abilities that are needed and hiring them. And by targeting training to the current workforce, to move their skills and abilities to those that are required to implement the plan that the agency has adopted for executing its mission.


Finally, the framework focuses on ensuring that an agency's human capital practices and policies create a culture in which high performance is expected and supported. Human capital practices should enable and motivate employees to achieve high performance. Achieving high performance may be aided by a performance management system that links, to the extent possible, individual performance expectations and rewards to the success of the organization itself.


In conclusion, the dynamic changes in DOD over the past decade and the continuing changes likely this decade, underscore the importance of a well-developed human capital management strategy to DOD's future mission accomplishment. It is vitally important to start by looking to the future, determining what type of workforce will be needed for the future. When this is done, DOD can develop plans for creating that workforce and following up with the actions and investments needed so that when the future arrives, the right employees with the right skills, training, tools and performance incentives will be on hand to greet that future.


That concludes my statement and Mr. Holman and I will be happy to answer any questions you have.


BATEMAN: Thanks, Mr. Brostek.


Mr. Holman, we'd be glad to hear from you if you have anything you'd like to add at this time.


HOLMAN: No separate statement, Mr. Chairman.


BATEMAN: OK.


HOLMAN: Just the observation that we have done a good body of work over the years, looking at a variety of Defense business practices, outsourcing, depot maintenance and issues like that. And we know the issue of personnel -- civilian personnel impacts from a drawdown readiness aging workforce are issues that are very much out there that are increasing concerns to people. So we're happy to participate in this hearing today because I think it is an important issue. That it does require some planning to deal with.


BATEMAN: Thank you, Mr. Holman.



BATEMAN: Mr. Brostek, let me ask you this: You've spoken of workforce plans for the utilization of human capital, which I think is very interesting terminology. At what levels does this take place? Is this done by someone in the office of the secretary of defense? Or is it done there plus in each of the military departments? Or is it within systems commands or major commands within each of the services? Where does the workforce plan begin and end?


BROSTEK: Well, I think it's going to have to occur throughout an organization the size of DOD. It has, as you know, a vast number of employees. About 40 percent of the federal civilian workforce is in DOD. So I think it's impractical to expect that all the workforce planning could be done out of one central location.


On the other hand, the important reference point for all of the workforce planning that needs to be done is a strategy that the department adopts for accomplishing of defending the country. And that's a department-wide policy that needs to be set. And then the individual planning that needs to be done by the various components is in relation to that strategic plan that was adopted, the approach that the department wants to follow to carry out its mission.


BATEMAN: We'll be hearing from Department of Defense witnesses shortly, but do you have any insights as to what degree -- elements of the Department of Defense or the office of the secretary of defense have been come engaged in what you would call workforce planning?


BROSTEK: Well, Mr. Chairman, I have to admit that we haven't done a comprehensive assessment of the department. But I do have an extract from the Defense Science Board Task Force report that came out just this past February that suggests that there is a bit of a gap in workforce planning.


If I can just quote a little piece of this. The report says: that today, there is no overarching framework within which future DOD workforce is being planned. An overarching strategic vision is needed that identifies the kind of capabilities the DOD will need in the future, the best way to provide those capabilities and the changes in human resources planning and programs that will be required.


This is a good statement of what needs to be done and it is also apparently a statement that, in the opinion of the Defense Science Board, that has yet to be done.


BATEMAN: What was the date of that statement?


BROSTEK: February 2000.


BATEMAN: Thank you.


Mr. Cipolla, in your written statement, you made reference to a phenomena called, "telecommuting."


CIPOLLA: Yes, sir.


BATEMAN: Have you done any particular study as to the effectiveness and productivity of workers who performed by the telecommuting phenomena?


CIPOLLA: We have, and among the reports that I mentioned earlier, there is some coverage of that. Recently, we had in one agency a review of telecommuting arrangements that were, in fact, negotiated with the labor union involved. And we participated in the assessment after the arrangements had been underway for some time.


This was an organization that was essentially an information technology organization, so it was conducive -- the nature of the work was conducive to this sort of thing. And the overall assessment was that it was working quite well in the view of both the employees and the unions and the customers who were in receipt of the services of the organization. As a generalization, it varies, and it is an extreme culture challenge in some organizations and less so in others. And I guess that's the best way I can describe it.


BATEMAN: I have two telecommuting centers in my district. And of course, most of the people -- almost all of them -- are federal employees. My general understanding is that it's very, very highly regarded by the federal employees. I'm more curious to know whether or not the federal workforce managers are sympathetic to and anxious to have their employees participate in that manner. But I guess our government witnesses can help with that.


CIPOLLA: Well, frankly, our experience has been that many managers find it difficult for a lot of the reasons that you might imagine, all associated with a loss of control in some form or another.


BROSTEK: We did some work on that -- if I can intercede for a minute...


BATEMAN: Yes, please.


BROSTEK: ... about two or three years ago, and we found a pretty similar result in the federal government, that there's a mixed bag among federal managers. Some were quite supportive, but others were less supportive. It was around a control issue. Sometimes it was around whether or not the manager felt that they could really assess the performance of the individual when they weren't in the office. If the type of work that was done was not something that could be measured easily, the supervisor was a little reluctant to let that not occur within his or her sight.


BATEMAN: Thank you.

Mr. Mica.


Mr. Ortiz. I'm sorry.


ORTIZ: No problem. I would like for the witnesses -- maybe all of you can give me some input. But do you think that evidence of an aging workforce is a condition needing correction, particularly since most of the jobs eliminated in the Department of Defense were lower- graded positions? Or is more analysis needed?


CIPOLLA: On the surface, that would appear to be the conclusion that one would reach. But at the same time, if we look closely at the skills that we need -- which is what this subject is all about -- in an organization now and in the future, an aging workforce isn't necessarily an indication of something that needs to be corrected. In fact, retaining senior-level expertise in some important occupational groups that are particularly difficult to recruit for in today's highly competitive market is something that needs to be included in strategic workforce planning. In other words, we need a balance.


BROSTEK: I would roughly concur with what Frank has said. The simple fact that the workforce is aging does not in itself tell us that there is a major problem. What it does tell us is that there's a flag here that some attention needs to be paid and some analysis done.


The situation in DOD is that the proportion of the workforce that's below age 31 has dropped fairly dramatically, from about 17 percent in 1989 to around six and a half percent now. Now, that may be an adequate number, but I think it's something that needs to be investigated to ensure that people who are needed to be the future leaders and talent of the organization are being grown.


We also have had some similar conclusions to what Mr. Cipolla was saying about the folks who are towards the end of their career. Sometimes it's to the advantage of the agency to offer various inducements to get people to stay a bit longer. And we do know that a thing called "phased retirement" is becoming more popular in the workforce of the country at large, where sometimes we offer people the opportunity to come back on a part-time basis two or three days a week, or something like that, to stay in the workforce and to keep that institutional knowledge that was gained over a long career available to the organization.


HOLMAN: I would agree with what's been said. Just echo, I think, the key word is balance in terms of requisite skills, grade, allowance for succession planning as we see the larger portion of the workforce seeming to be grouped in the 40s and 50s or closer to the 50s and nearing retirement the next few years. So it's a requirement for orderly succession planning and balance in that workforce.


ORTIZ: And I just have one more question because I would like for the other members to also ask questions.


But Mr. Cipolla, in your research, are you finding evidence of a general shortage of technical workers in the United States? If that is so, given the operation of the law of supply and demand, these skilled workers would be able to shift, you know, from job to job almost at will. Wouldn't it make more sense for the Department of Defense to contract for these workers as needed, rather than trying to rewrite civil service law to provide extraordinary authorities likely -- necessary to be able to maintain a large permanent staff?


CIPOLLA: Well, the premise that you stated, as you stated it, I would have to agree with. First of all, the shortage does exist. There is no sign that it's going to abate in the near future. The market is going to become even more competitive for scientific, technological and particularly people who have skills in information technology.


What you described is actually happening to the point that if you looked at the numbers of the information technology workforce across government agencies, you'd find that we have now reached the point that there are more contract employees than there are civil service employees. That in itself isn't bad, but it raises all kinds of questions about our ability to manage that kind of a mix.


ORTIZ: Thank you, Mr. Chairman.


BATEMAN: Thank you, Mr. Ortiz.


Now, Mr. Mica.


MICA: Thank you.


Just a follow-up to that, Mr. Cipolla. I'm not in the military side of this. I've watched it from the civilian side. But you don't have to be a military analyst to see that we have a change in the world situation and that we're now doing employments in sort of peaks and valleys. How do you maintain, like, a minimal civilian force and then be in a position to meet these peaks unless you go to contracting?


CIPOLLA: Well, I'm sure our colleagues from DOD are going to talk about the strategic sourcing process, which is aimed at identifying that core workforce or those core sets of competencies that are needed. The problem is that they need to be continually updated and there needs to be a systematic process that reassesses those determinations in the light of what's going on in the environment.


MICA: You haven't answered my question. With an active military, you can -- you know, we have a reserve force and we call them up; with a civilian, you have a core. Then what's the model to meet the peaks and valley with a civilian workforce if it isn't full- time employees or contracts? How do you approach this and be prepared all the time? What are the recommendations, before we hear from the other folks?


CIPOLLA: I don't know that there is a model that can be applied -- a quantitative model that can be applied across a whole agency or even a major part of it. What has to drive the determination about what the right mix is, is an assessment of what is needed in terms of the core work. What are the competencies that are required? If we can't get them from internally, within the Department's workforce, we can't compete in the market, then maybe the best response is to contract. But I don't know of any overriding model.


Mike, I don't know -- maybe GAO?


BROSTEK: I would agree that one of the likely sources for dealing with considerable workload fluctuations is contracting. It's certainly a legitimate source to turn to.


Agencies also have the ability to do some term hiring for employees, bring them in for, I believe, it's up to a three-year period of time, as federal employees to work on short-term projects. That can also be another mechanism for dealing with a fluctuating workload situation. It might be a situation that's desirable to use if you want to be creating government policy, doing inherently governmental functions which you wouldn't normally want to -- you wouldn't ever really want to contract out.


If I could jump back for just a second to Mr. Ortiz' point -- which is relevant to your question, too, Mr. Mica -- to the extent we do rely more and more on a contract workforce and we use them as the reservoir of talent for dealing with workload fluctuations, we have to be very careful to have reserved in the federal government sufficient oversight capacity to monitor the cost and the quality of the contract services that we're being provided. Because if we don't have the sufficient reservoir of capacity to monitor the cost and quality, we can suffer some pretty unfortunate consequences even through the contracting processes.


MICA: I have one more final question, if I may, Mr. Chairman.


We spent somewhere in the neighborhood, I think, of $4 billion on buyouts since '93. They came in and we did all kinds of buyouts and I became concerned -- Mr. Cummings and I held hearings on this -- about what was going on. Did we go overboard in the buyout area? Are we now suffering from going beyond what we should have with the buyouts or was it a balanced approach, Mr. Cipolla?


CIPOLLA: It's a difficult question. Did we go overboard? It has to consider the requirements and the targets that agencies were being expected to accomplish. Unfortunately, at least in the early stages, buyouts were being used to avoid restructuring rather than to support restructuring. And of course, our recommendation is that that whole process be turned around. To the extent that we can identify what the projected organization should be doing and structured accordingly if we need buyouts, to either protect needed skills or eliminate those that we don't need, then that's a more appropriate use. But the Defense Department didn't have those kinds of options, especially in the early -- nor did any agency -- in the early stages.


BROSTEK: We did, as you know, for you, Chairman Mica, a fair body of work on the downsizing as it was occurring. And we did find that early on in the downsizing period, not necessarily just through buyouts, but through all the techniques that were used, that there was kind of a rush to meet the target and there was inadequate planning to assure that when the target was met -- that the reduced workforce -- that those who were left had the knowledge skills and abilities necessary to perform the mission of the agency well.


Through legislation that you were involved with, as I recall, there was a requirement that agencies begin doing better workforce planning before they were able to offer any buyouts. And when we investigated agencies after that legislation passed, we did see some improvement in the targeting of the incentives for separations and thus, a better balance in the workforce as the buyouts -- or as the downsizing continued.


Nevertheless, with what we saw early on in the downsizing period and the lack of hiring for a number of years during the '90s, we're likely to still have some imbalances in the skills and abilities of the workforce.



MICA: Thank you.


Thank you, Mr. Chairman.


BATEMAN: Thank you, Mr. Mica.


Now, Mr. Cummings.


CUMMINGS: Yes, Mr. Brostek, just following up on what you just talked about.


Do you think there's enough authority now to be able to maintain that balance? In other words, if you've got one area where you really need people and, say, for example, technology, and then you have this other area that, just hypothetically, is more towards the manual labor side and now the technology has just taken over, do you have enough -- is there enough authority to be able to, for example, have a buyout situation for the manual labor folk and keep the other folk without -- you know, the skilled computer folks -- without running into problems? Because it seems like that's what you'd almost have to do.


BROSTEK: As I understand it, there is not a blanket authority that exists now for agencies to use buyouts to restructure or reshape their workforce. As a general practice, when agencies have a buyout or early-out authority, it's generally connected with a reduction in FTEs. Someone leaves with a buyout and they lose -- the agency loses one position to fill.


There have been a number of instances in which Congress has granted exceptions to that, specific legislation that was crafted for a specific situation in which an agency was given the ability to offer a buyout to restructure its workforce along the lines of what you're talking about. Whether or not a blanket authority is needed, we haven't really assessed that, but we certainly think it would be important for agencies to kind of make a fact-based case for why they need that, even if there was a blanket authority before they started using the buyouts again.


CUMMINGS: In my district, a private company, Domino Sugar, I think it's about eight or nine years ago, moved to computerize itself. It's now about 90 percent computerized and they literally cut their workforce almost in half. And they're able now to produce sugar, when you even throw in inflation, at the same cost that it was in 1960. That's amazing.


So the question becomes -- when they did that, though, they went through an intense retraining. And so now you've got these guys that used to be toting these big bags of sugar sitting up in an air- conditioned booth hitting buttons.


And you know, it was just so interesting -- they're making more money, they're doing fine. I'm just wondering how much emphasis have we put on retraining of the personnel that are there. I think, you know, that kind of thing is good for morale when people feel that they can now do something that they couldn't do before. It also bodes well for upward mobility. All of those kinds of things, I think, go to morale. And I think that that's something that we all have to be concerned about with regard to employees in the federal government. I was just where we were in those kind of things.


BROSTEK: Well, I think as both Mr. Cipolla and I indicated in our statements, training and retraining of the workforce, as the techniques used for carrying out the mission change, is a very important part of workforce planning and the execution of workforce planning. We haven't got a very good grasp on what the training situation is in the executive branch. There isn't any central reporting of training expenditures. We do have anecdotal evidence that during downsizing, training was one of the areas that tended to be cut and cut fairly severely. So it is a possibility that this is an area in which additional investments will be needed.


CUMMINGS: Now, Mr. Cipolla, you talked about flexible employment arrangements. What do you mean by that?


CIPOLLA: Well, anything other than the traditional 8 to 5 or five day a week, 40-hour workweek, different tour arrangements. Even different -- like the telecommuting that we talked about earlier, that term would include contracting, it would include the contingent or the supplemental workforce, the temporary people that we would add even from an employment agency, to meet a current need that we wouldn't need over the long term.


In government -- in most agencies over the years, we've tended to think of a full-time permanent employee as the only way we fill a position. We fill it the same way it was vacated as opposed to looking at different options, among those that I mention, for getting the work done.


CUMMINGS: Do we have in the -- I mean, what elements would we have to have, say, an agency have to have for telecommuting to be effective and for you to have -- apparently, it works in certain kinds of private industry. And I guess the question becomes, is how do we make it work, say, for the federal government or the various agencies within the government.


CIPOLLA: It essentially has to be -- at least this is our experience -- a local matter and one in which employees and managers can work out to their satisfaction, if their union is recognized, they should be involved. Employees need to be involved as early as possible in any proposal involving telecommuting. And there may even need to be training for managers on the advantages and disadvantages of going to a telecommuting arrangement. But it basically starts as a local process where you can't communicate too much about what the intent is.


CUMMINGS: I don't have anything else. Thank you.


BATEMAN: Thank you, Mr. Cummings.


Now, Mr. Underwood.


UNDERWOOD: Thank you, Mr. Chairman. And thank you both of you for having this hearing.


I want to ask a couple of questions, not so much in the framework that is offered to us here as managing human capital, but just more or less what happens to these human beings as a result of these so-called cost saving measures. In particular, in the community I represent, A- 76, which has just been devastating because it's not only the largest A-76 effort, it really has altered the dynamics of federal employment and all the kinds of issues that have been brought out here ranging from no more interest in federal employment, to the aging, to the problems associated with priority placement, what you do with an isolated community in which the only other option that people have is to seek employment in the federal system 5,000 to 6,000 miles away.


So the questions I wanted to raise were, what -- in terms of the thinking behind the kinds of protections or offers that we give to federal employees who are experiencing these job cuts and include early retirement and the buyouts and perhaps some attention to mobility -- the two questions I have related to that.


And then I have yet another question, is, what kind of thinking have either of you gentlemen given to what kinds of additional programs or protections can be provided or offered to the federal employees who are experiencing this?


And secondly, has either one of you studied what has happened to people who exercised the right of first refusal? What experiences do they undergo? Because the people who are -- this right of first refusal has been touted as a way to provide some worker protection. And in this particular instance that we're just undergoing these three months, people are being offered -- people who used to make $28,000 a year are now being offered $17,000 a year. And so you know, I rather doubt that, one, we have yet to see in the Armed Services Committee the savings that allegedly come from that; and secondarily, we certainly see the cuts into the pay that are given to these federal employees.


So could you address the issue of what kind of general thinking is there on the issue of incentives or protections? And also, what happens to the right of first refusal?


HOLMAN: Well, Mr. Underwood, we haven't done a systematic look at the right of first refusal. We know it certainly is there. And as an opportunity for federal workers who are affected by the A-76 process to accept employment with the winning contractor when the contractor wins the competition.


Anecdotally I can say to you -- I guess, you know, I've heard stories of communities where the affected workers got equal, if not better. I've also heard stories in other communities where they're -- perhaps workers may end up getting less benefits. But nothing overall that would say what the overall trend is.


I do know in one situation that's currently underway with the Army's logistics modernization effort, that effort offered employees a pretty good package, self-landing, to accept employment with the winning contractor. And I think the verdict is still out as to how many of those employees will, in fact, take that offer.


One of the things you run into at this day and time with the aging of the workforce, you have so many workers within five or six years of being eligible for retirement. And while they may have a good safety net or package to go to with that winning contractor, not quite willing yet to forego obtaining the retirement benefits they could get under civil service. So that's an issue that's out there that looms, that affects a lot of people.


But overall, I can't say we have detailed information on acceptance or rejection of the right of first refusal.


UNDERWOOD: Well, I think that certainly suggests itself for potential study and certainly a more systematic inquiry.


What about the issue of having additional incentives or protections? Are there any other ideas that have been generated?


BROSTEK: We haven't really done any investigation of what, in addition, is currently available, might be needed.


UNDERWOOD: On the issue of core competencies has been raised on trying to identify that core workforce. And the term "inherently governmental" is used to describe which employees or which kinds of activities you're going to keep on civil service activities -- with civil service employees.


Has, in your experience, the term "inherently governmental" been applied or understood evenly? Or has there been efforts to kind of make the definition elastic or contract whenever someone thinks that it's convenient to do so?


CIPOLLA: Sir, I believe that's, likely, a rhetorical question.


UNDERWOOD: No, I'm interested in -- well, I'm not interested in a rhetorical answer. Maybe you can just give me some facts so that I can ask another rhetorical question.


CIPOLLA: Our experience from talking with people in agencies, not only in DOD but across government, is that it is difficult to reach a consistent view of what is inherently governmental as well as have people articulate a consistent process. And I can't add anything to that. That basically is the ...


UNDERWOOD: So then it's not inherent.


(LAUGHTER)

HOLMAN: Mr. Underwood, I think the work that we've done the A-76 issue indicates to us that that's very much a subjective term. It does vary across agencies.


I think -- in fact, we're doing some work now, looking at the DOD's application of their DRID-20 (ph) process as well as the Fair Act (ph).


And I think it's safe to say, you do some inconsistencies between the services. I think it's going to be an evolutionary process as greater attention is given to looking at individual functions and trying to determine if they do involve work that should be done in- house or potentially subject to competition or contracting out. But there is very much an element of subjectivity involved.


UNDERWOOD: Well, thank you for those comments. And obviously, for it to be an evolutionary process means that a lot of people get knit in that process of evolution.


More importantly, as I pointed out to you, Mr. Chairman, ordinance activities are not even seen as inherently governmental in the contracting out on this particular A-76 study and it's not even seen as an issue of readiness. And this is a great source of disappointment to me and is in point of contention in the implementation of this particular A-76 issue that I'm referring to.


And I certainly would ask, you know, other members of the committee to help me sort this out.


Thank you.


BATEMAN: Thank you, Mr. Underwood.


Mr. Ortiz has a question.



ORTIZ: This goes back to when you were talking about the necessity of having some type of balance, you know, the contract workers versus the civilian force.


And let me tell you an experience I had last week or even before that.


As you well know, some of the Apaches were grounded -- couldn't fly. They needed to be refurbished.


And that's very key to our readiness, Mr. Chairman.


They went to a private company and they told them we need to work on 700 Apache helicopters. Their answer was: We can get started in May of this year and maybe finished by late 2001.


Well, they went to the civil service workers, they're finished with the work before the other company could get started. So we do -- at least I do believe very strongly that there has to be a balance.


The general went down there and says -- when he came to me, I am supposed to supply these helicopters when we go to war. And we were not in any position to do so. And he went down just to thank them because the companies, without having to name a name, couldn't do it. But the civil service workers could do it a year before the other company could get started.


So I think that the balance, Mr. Chairman, is very, very important.


I just wanted to make this point and maybe you can add something to it or maybe you had some experiences such as this.


CIPOLLA: I can't -- it's an excellent point and there are as many anecdotes of that sort on one side of the issue as there are on the other side, which points up the need for the validity of the process, and even more importantly, for having an objective that tries to achieve as much balance as possible.


BATEMAN: All right. Anything further, Mr. Cummings or Mr. Ortiz?


Well, gentlemen, we thank you very much for appearing before us today and giving us the benefit of your thinking on these matters and we are in your debt.


And with that, we will excuse the first panel and ask the second panel if they would come up and be seated.


Our second panel this afternoon consists of the following witnesses: Dr. Diane M. Disney, deputy assistant secretary of defense for civilian personnel policy; Mr. David L. Snyder, deputy assistant secretary of the army for civilian personnel policy; Ms. Betty S. Welch, deputy assistant secretary of the Navy for civilian personnel; Ms. Mary Lou Keener, deputy assistant secretary of the Air Force for force management and personnel; and Mr. David O. Cooke, director of administration and management, office of the secretary of defense.


Dr. Disney, we have your full statement and it will be made part of the record and now you may proceed as you choose.


DISNEY: Thank you, sir.


Mr. Chairman, members of the subcommittees, I'm very pleased to be here to today to discuss the matters affecting the civilian workforce with the Department of Defense.


Over ten consecutive years of downsizing have brought significant changes in DOD's workforce, as has already been pointed out. As fiscal year 1989 ended, DOD employed about 1.15 million people. A decade later, the number had declined to 732,000, a drop of over 36 percent. Plans call for another 11 percent drop from that number by the end of fiscal year 2005. But what does all of this mean?


First, there's been a four-year increase in the average age. Further, the number of employees younger than 31 has dropped by 76 percent. A third of the current workers are 51 or older as accessions have fallen from 65,000 a year to about 20,000. This poses problems in the transfer of institutional knowledge.


Second, we're seeing increasing levels of professionalization. While there's been a decline in all major areas, the sharpest drops have been in clerical and blue-collar jobs. The share in professional, technical and administrative jobs has risen.


Third, today's workforce is more highly educated than in the past and that's because today's jobs require more education and training than did earlier ones. Accompanying these changes has been an increase in typical grade level and in average costs. We clearly have a workforce that's very different from that of a decade ago.


We've worked hard to minimize the trauma associated with the drawdown. Indeed, we've held layoffs to less than 9 percent of total separations. Foremost among our internal efforts has been our priority placement program. Tied closely to that have been the voluntary early retirement authority and the voluntary separation incentive payment, better known as the buyout.


We are very grateful for your support with both of these and in related areas as well.


We also owe credit for workforce stability to our labor management partnerships, which have improved relationships, increased productivity and reduced costs.

Unfortunate byproducts of the drawdown include the declining rate of promotions and certain areas of skills imbalance.


Another challenge has been to develop leaders for a world of broader responsibilities, more complex missions and fewer resources. That's why we created the award-winning defense leadership and management program. This systematic investment in potential civilian leaders will show dividends far into the future.


Despite the pressures of change, defense civilians have continued to dedicate themselves fully to the department's mission. Outside pressures, though, are taking their toll. Because of the robust American economy, the civil service simply cannot match some private sector starting salaries.


But we use the workforce shaping tools I mentioned earlier. We ask for your continuing assistance as we enter this serious right- sizing phase.


First, we're continuing to develop tools for force shaping. These would provide the flexibility to meet critical mission needs and correct skill imbalances. For example, some units have downsized and reengineered to where they have the right number of employees, but might not have the right mix of skills. We're looking to modifications of VERA (ph) and VSIP (ph) in this regard. We're also seeking to extend the authority for employees to participate voluntarily in reductions in force.


Another request will be to restructure the restriction on degree training.


To permit us to be more competitive in the labor market, the department is developing a proposal for an alternative hiring system.


You've also expressed interest in our personnel system regionalization and systems modernization. We now have 22 regional personnel centers. We have eliminated 10 non-interoperable data systems. Our new data management system has been successfully deployed to sites in the Army, Navy and the Air Force. After Milestone-3 (ph) approval later this month, full deployment begins. And these efforts will save the department over $220 million a year.


That concludes my remarks. Thank you again for this opportunity to discuss issues related to our valuable civilian workforce, and I'll be pleased to answer your questions.


BATEMAN: Thank you very much, Dr. Disney.


Now we'd be happy to hear from Mr. Snyder, the deputy assistant secretary of the Army for civilian personnel policy.


Mr. Snyder


SNYDER: Thank you, Mr. Chairman.


I also have more detailed remarks and I'll just summarize it.

BATEMAN: Yes. All of the witnesses' prepared statements will be made a part of the record.


SNYDER: Mr. Chairman and distinguished subcommittee members, thank you for the opportunity to testify on Army civilian workforce issues, and also for your commitment to policies and programs that maintain the high quality of the federal service.


My statement will discuss Army's experience with the civilian drawdown, strength projections and related issues.


During the 10-year period that ended 30 December 1999, the Army reduced its total appropriated fund-strength by more than 42 percent. When only military functions are included, our civilian strength declined by more than 44 percent during the above period. And we are programmed to reach an end-strength of a little over 209,000 by 2005. This will be a 48 percent reduction from the FY '89 level.


We have experienced similar demographic changes to those of DOD as a whole, including a shift toward a greater proportion of the workforce in professional occupations and higher educational levels.


The age and tenure of Army civilians has increased significantly during the drawdown, and 30 percent of our professional administrative and technical workforce will be eligible for optional retirement in 2003, 62 percent in 2010.


To counter the losses we expect, it is critical that we significantly increase our civilian recruitment and entry levels, particularly in the professional, administrative and technical occupations.


The Army has an intern program and that is one of the means and methods that we use to access those who will become our future civilian leaders. We centrally fund our intern program, but it has declined steadily over the years during the drawdown. In 1989, we had a total of 3,800 civilian interns. We will have 950 in fiscal year '01.


We anticipate greater difficulty in filling journeyman level and leadership vacancies with high qualified and well-trained employees. Given the tight labor market, recruitment competition among employers is intense, and the Army, as well as other federal agencies, are at a competitive disadvantage because of certain requirements and restrictions of the federal personnel system. And we are participating with the OSD and the other components in a development of the DOD alternative system that Dr. Disney referred to.


We also have been participating in regionalization and it has been a challenge. We have aggressively addressed the needs of our customers and we will continue to do so, but it has not been easy.


Now one final thing on the Army civilian workforce: It has been and will continue to be a major contributor to military readiness, performing a wide range of future functions essential to the Army's mission. Over 43,000 civilians of the Army are forward-stationed around the globe. Army civilians have afforded direct support to operations -- direct support to operations such as Desert Storm, Haiti and those in the Balkans. And because of this dedication of our Army civilians to this important work, I'm especially pleased to have the opportunity to present the Army views on matters affecting our civilian workforce.


This concludes my remarks. I will be pleased to answer any questions.


BATEMAN: Thank you, Mr. Snyder.


And now we'd be pleased to hear from Ms. Welch, the deputy assistant secretary of the Navy for civilian personnel.


Ms. Welch.


WELCH: Thank you, Mr. Chairman, and members of the subcommittees. I am also pleased to be here to provide testimony about the civilian workforce of the Department of the Navy.


This afternoon, I will talk to you about the impact of 10 years worth of civilian workforce downsizing, where we are now, and some of our plans for the future.


Today, as a result of downsizing and reduced hiring, our civilian workforce is 44 percent smaller than it was 10 years ago. We achieved this reduction and minimized the impact on our civilian workforce by using all of the tools available to us, including the DOD priority placement program, out-placement services and the separation incentive pay authorized by Congress in 1993.


Before the incentive pay, 56 percent of our separations were involuntary. With incentive pay, that number dropped to 17 percent.


Downsizing left us with a more senior workforce. Ten years ago, only 16 percent of our workforce was eligible for retirement. Today, that figure is closer to 34 percent. The situation is even more troubling when you realize that 47 percent of our engineers, 55 percent of our scientists and 64 percent of our contract specialists will be eligible for retirement in the next five years.


The average age of our non-supervisory, blue-collar employees is 47. In the next five years, 53 percent of them will be eligible for retirement. This means we have an older workforce, closer to retirement, without an adequate number of replacements in the pipeline.


To prepare for the future and to ensure we have a diverse and highly skilled civilian workforce, we recognize the need for attracting, retaining and developing employees ready to meet the Navy's mission.


For the professional and administrative workforce, we are supporting our commands in establishing and coordinating a recruiting effort to attract high-qualified individuals.

On the blue-collar side, the Department of the Navy has a long and illustrious history of hiring and training the best deck-plate workforce in the world.


During the past 10 years, as we have closed several of our shipyards and aviation depots, our apprentice programs slowed to a trickle.



WELCH: Today, our systems commanders and the Atlantic and Pacific fleet commanders who are responsible for the department's depot level workforce consider the apprentice program a vital part of their efforts to prepare for the workforce of tomorrow. Thanks to the additional funding received in FY '99 and FY '00, our apprentice programs are now being revived.


The well-being and development of our current workforce is also an important part of our future. Our focus is in three areas: workforce development, quality of work life and workplace dispute resolution.


First, we are committed to our workforce through programs such as the DOD leadership and management program, the Department of the Navy civilian leadership development program and continuous learning initiatives for our employees.


Secondly, we are continuing to encourage our commands and activities to use flexible work arrangements such as job sharing, part-time employment, alternative work schedules and satellite work locations suitable to the local needs.


And finally, we are focusing on workplace dispute resolution, an issue of extreme importance to our employees and managers. In 1997, we launched a reengineering project to look at our Equal Employment Opportunity Program. The number one problem cited by both managers and employees was a costly, lengthy, divisive process used to resolve EEO complaints. With that in mind, we put together a pilot EEO complaint process that deals with these issues and provides a less contentious forum for resolving workplace disputes. We are extremely pleased with the results today. Our employees at the pilot sites are choosing to take a more active role in early resolution of their disputes. More of the complaints are being resolved informally and the processing time and costs have been significantly decreased.


Based on our positive experience, we are expanding the pilots to several more activities this year.


This concludes my remarks. Thank you for the opportunity to address you and I'd be pleased to answer any questions you may have for me.


BATEMAN: Thank you, Ms. Welch.


I neglected to mention that a part of your title is secretary of the Navy for civilian personnel and equal employment opportunity. So I can understand why you highlighted that.


Now,we will hear from Ms. Mary Lou Keener, deputy assistant secretary of the Air Force for force management and personnel.


Ms. Keener.


KEENER: Mr. Chairman and members of the subcommittees, I am pleased to join Dr. Disney and other panel members in testifying on these very important issues.


It is a privilege to represent the Air Force civilian workforce, whose daily contributions ensure the readiness of our force.


The Air Force cannot rely on just one element of our force for readiness. It takes all of our people -- military, civilian, guard and reserve, their integrated contributions and the synergy and flexibility they create -- to ensure that we are the preeminent expeditionary aerospace force in the world.


We appreciate the support that the Congress has provided to address military recruiting and retention issues. Our challenges in the civilian workforce are no less serious.


My written testimony addresses these challenges in more detail, but I would like to spend the majority of my time this afternoon and focus my comments on how we in the Air Force plan to address these challenges.


I'd like to tell you that we do have a plan to meet these challenges. We have a civilian workforce-shaping plan that we feel is specifically geared to satisfy our future Air Force mission requirements. And with your help, we are prepared to begin to execute this plan.


In my written testimony on page five, there is a colored bar graph, and this graph depicts for you, where we anticipate that our civilian workforce needs to be by the year 2005. That graph also outlines for you the three major elements of our workforce-shaping plan that will, we feel, assist us to reach our objectives. That plan consists of three major elements. Those major elements, as you can see, are first of all, force renewal, force skills, development skills, accuracy and separation management.


In the area of accession planning, force renewal is a priority for us and it is particularly critical in the depots. The depot maintenance community has experienced a decade-long hiring restriction freeze and BRAC actions that have resulted in a severely imbalanced -- a severe imbalance in skills and levels of experience.


In the next few years, we will lose more employees, particularly in the blue-collar occupations, due to years of service and we need to undertake aggressive hiring efforts.


In the area of force development, the Air Force will invest in training and retraining our current employees to keep them up to date in this rapidly changing environment. But we also need the ability to achieve that third prong of our plan, which is, to stimulate and manage separations in our workforce.


The voluntary early retirement and voluntary separation incentive programs that you provided us with -- and for which we are very grateful -- have been very valuable tools to rapidly draw down the force. But we need the ability to offer targeted voluntary incentives that are not tied to reduction in force and can be used with more precision in shaping the workforce that is needed to meet our mission requirements.


In closing, the Air Force believes that it takes all elements of our total force working together in a seamless manner to sustain readiness. With your help and the tools necessary to execute our workforce-shaping plan, we will sustain the best force mix and the best talent to do our job.


We appreciate the opportunity to address these critical issues regarding the civilian component of our force, and I will be happy to answer any questions of the panel.


BATEMAN: Thank you, Ms. Keener.


Now we'll be pleased to hear from Mr. David O. Cooke, who is the director of administration and management for the office of the secretary of defense.


Mr. Cooke.


COOKE: Thank you, Mr. Chairman.


I am here representing what we call "the fourth estate." Perhaps I'd better define that. The fourth estate is the Department of Defense which is not in the departments of Army, Navy and Air Force. You know, it's really ...


BATEMAN: Mr. Cooke, if you would, pull that microphone a little closer to you.


COOKE: I will, indeed.


The fourth estate is composed of defense agencies, defense field activities and several other defense organizations. Not as alike as peas in the pod. Some of these defense agencies or field activities are very small; Some of them represent substantial size -- the defense logistics agency, for example, or the defense finance and accounting agency.


The problems in the fourth estate, though, are essentially those described by my colleagues, Dr. Disney and so forth. We appreciate the opportunity to be heard on these problems. I can only observe that the fourth estate, as a group, is overwhelmingly civilian, more so than the military departments. It's more heavily white-collar and it's more heavily female in composition.


Now, there is a tendency to think that all members of the fourth estate are alike, and that's simply not true in terms of organizational mission, reporting assignments and so forth. For example, there is some, I think, misconception that Washington headquarter service is just OSD by another name. But the Washington headquarter service is an operating function. It supports, for example, all administrative space, GSA space in the national capital region. I have a small outfit in the Washington headquarter service which is responsible for absentee voting worldwide. We're doing some very interesting things, by the way, in seeing whether we can eventually have voting by the Internet.


Despite its growth -- the fourth estate has grown over the years largely by taking functions which were fragmented among the military departments and pulling them together into a defense agency or defense field activity. But nonetheless, we have maintained our share of reductions along with the military departments. OSD itself, for example, has come down by 33 percent. So there are significant reductions.


We certainly need the things that Dr. Disney talked about to shape the workforce. We support them. And I, of course, am available to answer any questions you may have.


Thank you.


BATEMAN: Thank you, Mr. Cooke. And I thank all of the witnesses for being here with us today and providing us with their testimony.


I'm intrigued as to some of the statistics. I don't remember them all. I didn't write them all down. But we have a DOD-wide percentage reduction in civilian personnel. We have different percentages for each of the services. Could you review for me what the percentage reduction has been since, say, 1989, or whatever date is more convenient, so that we have an idea as to the relative size of the downsizing in each of your agencies?


DISNEY: For the department as a whole, the reduction has been from 1.15 million to roughly 732,000, which is roughly 36 percent.


BATEMAN: And for the Army, that figure is...


SNYDER: Mr. Chairman, the Army has gone from 406,000 civilians at the end of September 1989 to approximately, today, about 220,000. That's roughly 42 percent.


BATEMAN: And Ms. Welch, the Navy?


WELCH: The Navy, sir, in September of 1989, we were at about 130,000; December of '99, 184,700, for about 44 percent smaller.


BATEMAN: And let's see -- Mr. Cooke, in your fourth estate?


COOKE: I'd like to supply for the record, you don't want -- oh, 14 defense agencies and seven ...


BATEMAN: Yes, yes. And you don't have a ...


COOKE: But overall, there is a substantial reduction, but that number would be sort of meaningless because some of our larger agencies have taken much larger percentages than some of the smaller ones and so forth.


DISNEY: Mr. Chairman ...


BATEMAN: Yes, certainly.


DISNEY: ... if I could, I would like to take this question for the record because even though we know the numbers, there are differences in whether everyone is talking about military and civil functions. So in order to make certain that we're giving you consistent numbers, I would like to be able to provide the data for you.


BATEMAN: That would be very helpful, if you would, Dr. Disney.


DISNEY: I'll do that.


BATEMAN: Oh, Ms. Keener, I didn't give you a chance to answer, excuse me.


KEENER: Mr. Chairman, in fiscal year '89, the Air Force stood at 260,000 members. At the end of fiscal year '99, we were at 165,000 for a decrease of about 37 percent.


BATEMAN: OK. There are further reductions in the civilian personnel force contemplated. What is that number?


DISNEY: Yes, sir. Another 11 percent from the fiscal '99 levels between now and the end of 2005.


BATEMAN: Who determined that that number should be 11 percent as opposed to 15 percent or 5 percent?


DISNEY: That's part of our normal budgeting process, sir.


BATEMAN: But it is a figure ...


DISNEY: A department-wide effort, yes.


BATEMAN: ... developed by the Department of Defense, not something that we in the Congress said you shall reduce by that number.


DISNEY: Well, there are some instances where the Congress indicates that we should take cuts of a certain magnitude, either number or percentage, as in headquarters and as in the acquisition core.


BATEMAN: My colleague, Mr. Hunter, is very prone to be very outspoken on those two categories of personnel. Do you have any observations you'd like to make on that subject?


DISNEY: On Mr. Hunter or on reductions?


(LAUGHTER)


BATEMAN: I'm sure we would all praise Mr. Hunter, but on the question of reductions and whether they are manageable.


DISNEY: Yes, sir. The department would find it much easier to manage if there were not constraints on specific percentages and specific areas. That would make it perhaps easier to manage to meet the full competency needs for readiness as we've indicated earlier.


BATEMAN: You've spoken in terms of the number of people and the dramatic increase in the number of people eligible for retirement. Do you contemplate need for incentives for people not to retire?


DISNEY: No, sir. We already have retention options that are available to us.


BATEMAN: So you have some tools to...


DISNEY: Yes, sir.


BATEMAN: ... to encourage selected skills that are in short supply to remain in the workforce even though they're eligible for retirement.



DISNEY: Yes, and we find that a great many people who are retirement eligible do not, in fact, retire.


BATEMAN: I've done that for a while, myself.


DISNEY: And we have an example right here at the table.


BATEMAN: OK.


Mr. Mica.


MICA: Thank you.


I'm wondering if you have looked at ways to create incentives to stay. Since it costs so much to train new people, since people are living longer and working longer, is there anything that you've recommended in your legislative package or personnel changes and procedures as incentives to stay?


DISNEY: No, sir.


KEENER: I would add, Mr. Mica, that in the Air Force, we have recently executed a 10 percent across-the-board retention bonus for our Reserve pilots. So that's one initiative that we've just executed.


MICA: Well, it seems like, you know, in an area that's highly technical, if you can get these folks to stay on and encourage them, they're going to probably retire -- get some retirement benefits and go do the same thing somewhere else, which doesn't make a whole lot of sense.


DISNEY: Well, sir, we do have the retention allowances, and we're making every effort to make certain that managers across the department are more aware of these so that they can, in fact, be used in areas of skills need.


MICA: Well, that's, you know, an incentive program. How about -- has anyone broached the possibility of, like, adding a month on every year in the future towards retirement, we keep them around a little bit longer? What is it to retire, now? Like, you know, 20 -- well, I guess you can retire just about any time.


DISNEY: You can take early retirement after 25 years of work at any age, but there is, of course, a reduction in the amount that you would get.

MICA: Well, what about 25 years and a month -- and add a month every year and...


DISNEY: That's a very interesting concept.


MICA: ... like we're doing with Social Security. Has anybody proposed any changes in what we've had? I mean, these ...


DISNEY: Yes, sir. There is one option that has been proposed -- that has been discussed within the department, and that is one that we call phased retirement. That stems from the belief that people are reluctant to retire sometimes, for reasons of -- for fear of loss of income of fear of loss of sanity. And we've tried to devise a way to address both of those concerns, which would allow an individual to go from full employment to 75 percent time, but be able to draw perhaps on some of the retirement income so that the income loss would not be a problem.


The second year, it would be a 50/50 arrangement and then the person would leave. That would provide a rational way of an individual moving out, but also bringing somebody in and having an orderly transfer of institutional knowledge. Now that is just one idea that has been discussed.


MICA: It sounds like you've got a heap of people that are getting ready or will be eligible to retire, and some in some very strategic, high-cost, difficult to replace or train or acquire.


In a job market that's becoming increasingly tight and smaller numbers, I think we ought to be looking at something where we could retain, have some incentives.


You know, I love to have these people greet me at Wal-Mart, but I think that their talents could be better utilized in some of these positions.


I'm surprised that the military and civilian employment really hasn't looked at more incentives to retain good folks and reward them for staying, or revise a schedule that was set up.


Now, you know, Mr. Bateman's going to be around, live a long, long time past his retirement. Hopefully...


BATEMAN: I think the sanity might be a problem.


(LAUGHTER)


MICA: But he'll be looking for something to do.


Of course, we have our own retirement plan, but that's put in effect by voters, too. It's a little bit different situation.


But seriously, it seems to me that we're sort of missing the (inaudible) and that a lot of the civilian people are realizing this, that people work longer, they can contribute longer, and we shouldn't push them out and then bring in someone at a higher cost. So they have a longer productivity and make some incentives available.


DISNEY: Yes, sir, this is an issue. I agree with you more and more on every passing year. And...


MICA: Particularly at your age, you should.


(LAUGHTER)


DISNEY: Bless your heart.


We'd be more than delighted to work with you and your staff on exploring options...


MICA: You have in the past and I appreciate that. Thank you.


Thank you, Mr. Chairman.


BATEMAN: Mr. Ortiz.


ORTIZ: Thank you.


For Ms. Welch, I have a question: How important was it for the Navy apprenticeship program funding to be outside the working capital fund earmarked -- in other words, what would happen if the funding were to be rescinded?


WELCH: First, I think we need to thank you for giving us those funds. And it would be very important to us to continue to have those funds outside of the working capital fund. As you know, that was part of the reason for the degradation in the apprenticeship program to start with. And so the continued budget support is most appreciated and is being used very, very well.


ORTIZ: Very good.


And then, for Mr. Snyder: What tools does the Army have in place to ensure that it retains, if necessary, technical skills in its industrial facility when across-the-board reductions are ordered?


And this is because of prior experiences that we've had. At the Army depot, you know what they did? We said we must downsize. We downsized, but we never took it into consideration who was going to be relieved of their duties, who was going to be out. And then we find ourselves -- that some of the technical skills that we had were gone. So do we have something in place that will help us maintain those skills?


SNYDER: That's a two-part answer, Mr. Ortiz. And the first part is, when activities downsize, they take a look organizationally, and as a general rule, they do not take out of the workforce, skills that they need. That's one of the fundamentals of the way that we run reductions within the -- not within the Department of the Army but within federal government as a whole.


Now on the other side, where we come around in terms of accessions, we have what I call a -- and I refer to it in my statement -- an intern program, which is for the Army career programs, engineers and scientists, and it's basically a white-collar program. It's basically a white-collar program that while we have those people in that program, they are insulated from reduction in force. In other words, they will not be touched by a reduction in force.


We are now working with the Army materiel command to try to size -- and we're working on the requirement to try to get to an appropriate size, what an apprentice program should be because we just recently heard form General Coburn that says that this is one of his largest needs.


And so we're trying to get the right size on that requirement even today. And we expect to have it finished some time in the spring.


ORTIZ: Thank you.


Thank you, Mr. Chairman.


BATEMAN: Mr. Ortiz.


Let me ask if I might, if each of you could address whether or not, in the phraseology of Mr. Brostek, the Department of Defense as a whole and the military components are in the course of or have developed a workforce plan. Do you all of you have one? Or are you in the process of developing one in the context of the testimony of Mr. Cipolla and Mr. Brostek?


DISNEY: Yes, sir. The Department of Defense, historically, has not approached the planning for the civilian sector as it has for the military because there are inherent differences between the two. The military has age restrictions, it has an up-or-out system, it has a mix of floors and ceilings and other kinds of things that make the planning there much more rigid.


The civilian sector, though, has no mandatory retirement age and rather than up or out, it's much more an up-and-stay kind of model.


For the past six years, we have been paying a great deal of attention as the department and as individual components to workforce planning. For example, every three months -- three to four months, we bring all of the components in the functional areas together to assess where we were on a great range of demographic characteristics -- successions, eligibility for retirement, and so forth -- in 1989 and where we are now. We looked at the difference.


We have built a micro-simulation model that permits us to make projections of where we will be five years or so into the future. So we look at where we're likely to be if there are no changes in policies or programs. If we're not satisfied that we're headed in the right direction, we use those forums to develop legislative proposals or internal programs to change the way we operate. It is that process that has enabled us to come forward with our legislative proposals.


Beyond that -- well, data analysis -- let me talk a little bit more about that.

We have commissioned some very special studies to help us in this regard. In one case, RAND Corporation is working with us and the joint staff on a study called "Future Worker/Future Warrior" where we look at all the military and civilian positions we have now and compare them to all other positions. We had a cadre of occupational analysts from a number of areas look at them across five different dimensions as to how likely they were to change in the future and where our need was to be.


What we wanted to do was to determine the mix of competencies necessary in 2010 so that we could begin changing our programs and influencing high schools and colleges to change theirs to enable us to yield the right mix from which we could select in the future.


In addition, we have done any number of studies related to the impact of A-76 and other kinds of things. So we've built a body of research that enables us to meet the first important prong of workforce planning, which is the database.


The second thing we've done on a department-wide basis is increase our investment in education and training. We mentioned the DLAMP (ph) program. We have also been working with the acquisition, technology and logistics community to identify the key two-dozen competencies to be needed in the future so we can restructure the defense acquisition university to yield what we will want in the future.


We have been doing a similar thing with the intelligence community.


So there are more examples, but those will suffice for now.


And the third is to develop a managed approach to accessions and separations. So when we put the three of them together and say we have a plan, a strategy for the department as a whole, and then this cascades down to specific plans with somewhat varying details in each of the components.


BATEMAN: In light of Dr. Disney's very meaningful statement, does any other witness have anything they'd like to add?


Mr. Snyder.


SNYDER: Yes, Mr. Chairman.


The Army has a system that is known as total army analysis -- and I'm sure Mr. Hawley (ph) has probably been associated with that in the past -- but the term, total army analysis, up until a couple -- or up until last year, was not total because it did not include the civilian part of the workforce.


And so what we have done in the Army -- what we did in the Army last year, was we started the process to include the whole civilian workforce in total army analysis. And the TAA process goes out into the out years to I think it's to about 2010, if not a little bit sooner. But what we have done with that is, we use a very sophisticated projection model on the civilian workforce side, which, as Dr. Disney says, will do a very good and accurate job of projecting where we will be, absent any policy changes.


We then take our functional chiefs and our career program managers to take a look at the 80,000-or-so high level civilians we have, to take a look at their career fields and add into that what they know and believe will come as a result of technology changes and whatever. At the end of that, we end up with a much more precise slice of what we believe the civilian workforce will look like. Is it 100 percent accurate right now? No, but it's a lot better than what we used to use.


BATEMAN: Thank you, Mr. Snyder.


Anyone else have...


KEENER: Yes, sir. I would just like to add that I did briefly describe our plan in my opening statement, but I wanted to add, that last month, in February, we executed a civilian workforce-shaping summit here in Washington. We brought stakeholders in from all over the country and encouraged them to think out of the box. That's why I was interested in Mr. Mica's comments earlier, because these people were encouraged to think about the kinds of things that you were talking about that might aid us in our workforce shaping.


Also I'd like to mention that the Air Force materiel command is our largest employer of civilians, and they have been engaged in an in-depth study over the last year to try to come up with a plan to right-size the civilian force at AFMC and specifically looking at the depot force in that command.



BATEMAN: Thank you very much.


Anyone else?


Yes, Ms. Welch.


WELCH: The Navy, as you probably well know, is much more decentralized than our fellow components here. Over the last two years, we have been working with our highest-ranking civilian executives looking at how to shape our workforce for the future because it is a major concern to us.


BATEMAN: Thank you.


Mr. Cooke.


Well, we apparently -- are we in recess or we have votes?


(CROSSTALK)


Mr. Cummings, we'll call on you as we clarify whether or not this is a recess of the House or whether it's votes.


CUMMINGS: Very well. Thank you very much, Mr. Chairman.


What are we doing with regard to -- what do you do with regard to colleges? I mean, just a little earlier we talked about training and somebody -- the panel before you all talked about how so often when the budget is cut, a lot of times training dollars go out, you know, are reduced. And I just believe in training, because I think any time you can give people an opportunity to become better and to make more money at what they're already doing in the field that they're already in, I think, is really good.


So I was wondering, number one, what -- I mean, do you all find that to be the case? What kind of training opportunities are there available as you try to restructure and make the workforce consistent with your needs?


DISNEY: We're making a very concerted effort within the Department of Defense to dedicate more dollars to education and training, but also to use the dollars that we have more effectively. And that cuts across every level of education and training.


CUMMINGS: So do you use colleges? I mean, in other words ...

DISNEY: We have, in our defense leadership and management program, we're offering courses that we do in conjunction with institutions of higher education. We also are proposing some legislation this year that would eliminate the restriction against paying for degrees. That is a barrier to us in some areas, because while it is perfectly legal for us to pay for individual courses and have those courses perhaps lead to a degree, that's not necessarily the same thing as enrolling someone in a degree program for a definite purpose. We'd like the flexibility to do the latter because that's better career management.


CUMMINGS: And legislation, would it have -- I mean, what kind of teeth does it have, if any, to make sure that the person, once they get the degree, you know, sticks in that job that we are preparing them to do? I mean, is it a certain period of time?


DISNEY: There is a requirement for staying three times the length of the education or training, yes, sir.


CUMMINGS: So where is that now?


DISNEY: That is in our legislative package, working its way through the process.


COOKE: Let me tell you a program we ran in OSD that does very well. We have authority, as we all do, to bring in interns for the summer -- college or whatnot. We decided to bring in faculty members from the historic black colleges and universities for two reasons. One, they'd be a little more mature and we might get some better contributions from them in the summer; two, they would go back to their campuses and they'd talk up OSD and WHS of being not bad places to work, and it's done reasonably well over the years.


CUMMINGS: Very good...


(CROSSTALK)


BATEMAN: Mr. Cummings, I suspect the committee ought to recess now in order to go and vote, but we will return if the witnesses will be patient with us, as soon as we can take care of two votes.


(RECESS)


BATEMAN: And I'll recognize Mr. Underwood for any question he may have.


UNDERWOOD: Thank you, thank you very much, Mr. Chairman.



UNDERWOOD: And thank you for your testimony. I read briefly through some of it and I had a conversation with you just now, Dr. Disney.


And perhaps just for the record, I asked a question with the earlier panel about some thinking about how to better provide assistance to workers who were undergoing a dramatic work transition through no fault of their own and what are some of the ideas behind that. Any kind of new innovative ideas, other than the current existing system? And what about the issue of how we deal with the term "inherently governmental," which is kind of a -- certainly a sore spot because it varies from agency to agency, I'm sure, but particularly with regards to the Department of Defense.


DISNEY: Yes, sir. "Inherently governmental" is a term that can vary -- the definition of which can vary from agency to agency. As we were talking, what is inherently governmental in the Department of Agriculture may well not be in the Department of Defense. And I think there are, working, about as many definitions of that as there are agencies at this particular moment. But we're going through a process within DOD to try to make certain that there is unanimity within the department as to what this means.


Also within the department, we've been very concerned about trying to manage the downsizing humanely, not just efficiently. And that's why we have continued to invest in our priority placement program, which is the model placement program, I think, in the country.


This enables someone who is about to lose his or her job for no personal fault at all to find new employment within the department. The individual registers, perhaps as long as two years in advance of a reduction in force, and is retained on the roster as long as a year after that in order to provide an opportunity for there to turn up a position for which the person is well qualified, individual registers in areas of competence and if they're -- and in geographic areas of preference.


And if there is a position that comes up, that person has that job unless it can be demonstrated that he or she is not qualified. This has served us very well since its founding. It has found new jobs within the department for 161,000 people. Since our drawdown began, it has found new jobs for some 75,000 within DOD.


At the height of BRAC, it was finding them at the rate of 1,000 a month. Now that rate has declined because we have fewer positions into which to put people.


In the situation of Guam, we know that over 200 people found new jobs within priority placement and others have received new offers.


We also instituted a special program called the expanded buyout program that enabled us to pay buyouts in other areas and then relocate someone into that empty position. And an additional 40 have been able to continue their employment through that.


So when we add the ones who have received VSIP and VERA (ph), we see that about 500 of the individuals who were facing dislocation through no fault of their own have either been -- have found a way into retirement more easily that what would otherwise have been the case, or have retained their employment.


The others are still registered, so there are options that are still available.


UNDERWOOD: On the issue of "inherently governmental," in our discussion and certainly in this committee, we've heard it before, those activities, which are directly related to war fighting and preparation for war fighting.


And what strikes me as odd in the particular case of Guam is that we have taken ordnance handling -- which I would assume almost anyone would readily admit is preparation for war fighting -- has been contracted out, has been subjected to outsourcing. It occurs to me that that's quite a stretch.


And also, you know, if the main motivation is saving money, and you have a case like -- a community like Guam -- which is many, many thousands of miles away -- when you reduce the inherent and the core capacity to respond to military activities out there -- as has already been the case with lots of people leaving -- the time in the future when there may be a bump up or a need to raise the level of activity again, it's actually going to be far more costly because people are going to have to be brought in.


And either -- if it's done by the contractor, the contractor is going to put that into whatever additional funding, any modification for their contract. Or if it's going to be civil service, then obviously you have a case where you're going to have a lot of people who are, quote, "state-side higher" (ph), and they're going to be entitled to many, many more benefits.


And it just seems to me that even though it's very difficult to make the case here because they're all civil service employees, but in this particular instance, there was -- you have what is a forward- deployed situation being dealt with as if it was another military installation, you know, with a usual economic environment and usual numbers of people that are available for various kinds of jobs.


But on some of these jobs that are very, very specialized, the capacity is gone and they're now thousands of miles somewhere else.


DISNEY: Sir, I'm afraid I'm not totally familiar with all the details of the reasoning for the contracting study. And for that, I would have to defer to Ms. Welch of the Navy, if she would care to comment.


UNDERWOOD: Ms. Welch.


WELCH: I can't comment any further either as to why that contracting out study was done. But I would be happy to find out and get that information back to you if there's anything further we can add.


BATEMAN: If you would supply that for the committee's record for the hearing.


We are going to keep the record of the hearing open in the even there are other members who have questions and haven't had a chance to pose them or if staff might have some questions that they feel like we would be benefited from.


Also for the record, Dr. Disney, you were going to furnish us with the numbers on the drawdown in the various departments and agencies within the Department of Defense.


Would it be unduly burdensome to also give to us the number of new contract employees, non-governmental employees, that are now on the payroll, and the cost of those people?


DISNEY: Well, sir, there is no requirement that that information be collected, so a consequence, there is no database on the employees of the contractors. The database that we have on contracts doesn't include it anywhere.


BATEMAN: So, you have no basis ...


DISNEY: No, sir.


BATEMAN: ... to determine how many people are now doing services for the United States government under contract relative to the number of civil service employees who've gone away.


DISNEY: That is correct.


BATEMAN: OK.


Mr. Chambliss.


CHAMBLISS: Thank you, Mr. Chairman.


Ms. Keener, as you correctly note in your written testimony, there is an increased -- we're in an increased era of contracting out and privatization. And as the military, and in particular the Air Force, outsources new weapons systems, what impact does that have on the workforce's ability to sustain the systems that are assigned to the government? And what's being done to ensure that the government retains the skills to ensure a ready and controlled maintenance capability?

KEENER: First, Mr. Chambliss, we are -- it is our intent to fully comply with the 50/50 rule, the ratio. And right now, we are right at that level, so we do not intend to ever go beyond the rule and contract out to a greater degree more than 50 percent of that workforce, particularly in the depots, which I think you're referring to.


On the issue -- the second part of your question: What do we intend to do to guarantee that we have a good balance of skills and be able to sustain the force. In my oral statement, I described the strategic civilian workforce-shaping plan that the Air Force has developed. And in that statement I describe the three-prong process that we intend to utilize to do exactly what you have asked.


First of all, we're going to deal with accession planning and that deals with force renewal, which will be particularly important in the area of helping us to bring in new entry-level employees in the blue-collar area.


The second aspect of our plan deals with training and retraining, and that will help us to provide a better balance of the skill mix that we have in our force.


And last, we talked about the importance of separation management as a part of that plan and that will assist us to expand our VERA-VSIP (ph) authority so that we will be able to use that as a real management tool rather than just a reduction-in-force tool and selectively be able to narrowly focus those individuals that we want to offer buyouts to.


CHAMBLISS: The Air Force has previously testified about difficulty in hiring skilled personnel during surge times. Can you talk a little bit about what impediments they do face and what we're talking about doing to overcome those impediments?


KEENER: In certain areas, specifically in high tech areas, information technology, those particular areas that we really need skilled people for, it is particularly difficult to find those people and to bring them into the workforce. But we are doing everything that we can to utilize initiatives in the area of force-renewal to be able to attract these people to the Air Force. We recognize that there are severe impediments out there. We're dealing with a very robust economy. But some of the specific initiatives that are in both Dr. Disney's testimony and in my testimony, we're targeting to help us to bring in a new entry level Force.


CHAMBLISS: Well, realizing that we're in a little bit different economy than we were in in '91 and '92 when we were last required to really surge, are we looking ahead to the potential impediments that may be there? And do we feel confident, in the event of a near-term conflict, we're going to be able to reach out and fill that surge- capacity problem?


KEENER: Yes, sir, I think we do. And the plan, as I described it in my statement, projects -- this plan is really based on what we perceive to be our mission requirements in the year 2005. So this plan is not just a plan to try to bring in people that we need. This is a real plan that is geared to what our mission requirements will be and that will actually help us to achieve that state of readiness that we know we need to be at.


CHAMBLISS: OK.


Dr. Disney, I have heard complaints over the last several years -- six years -- from quite a number of my constituents who work at Robbins Air Force Base about the lack of increases in the wage-grade pay scale compared to other areas of the state. Can you explain why a worker, say, an electrician at Robbins Air Force Base, might be paid at a certain level, while a worker doing the same job in Atlanta, which is less than 100 miles away, might be paid at a higher rate? Or a worker doing the same job at another government agency in Warner- Robbins would be paid at a higher rate?


And also, why have the general schedule employees received pay increases equal to twice the amount of the wage-grade people over the last 14 years?


DISNEY: Yes, sir. The general schedule and the blue-collar workers find their wages set in different ways. For the general schedule, the wages are set on a national level, with the increases set nationally. And a portion of the national increase is set aside for locality adjustments -- a very small portion of that.


But what that means is that the core wage of a GS worker in Washington, D.C. is the same as that in Macon, is the same as that in Portland, Oregon.



DISNEY: The federal wage system employees, on the other hand, find their wages based upon prevailing wages in the geographic area in which they are located -- generally, the commuting area. These wage areas are determined through the work of the federal prevailing rate advisory committee, which is advisory to the office of personnel management. That consists of both union representatives and civil service agency representatives.


The wage surveys are conducted by people in my organization in conjunction with their labor counterparts, and that's where the information comes from, from surveys of the area that get used to establish what those rates are.


CHAMBLISS: Well, I understand that, but -- I mean, you've got -- for example, in our depot, you've got specialized jobs that there aren't many jobs like that in the area immediately surrounding the depot. But there are those same jobs at Lockheed, for example, in Atlanta, which is, like I say, less than 100 miles away and certainly within -- we got folks that commute every day back and forth to Lockheed from Atlanta down to the depot.


And the wage rate in the Atlanta area is not used at the depot. It's not in our prevailing wage schedule. Why would that be the case when there's nobody else in that category within the local area there?


DISNEY: Well, sir, I don't have all the details on that, but I would be more than happy to find them out and to provide information for the record for you.


CHAMBLISS: All right, if you would, please.


DISNEY: Yes, sir.


CHAMBLISS: Thank you, Mr. Chairman.


BATEMAN: Thank you, Mr. Chambliss.


Dr. Disney, I was just handed the conference report on the National Defense Authorization Act for fiscal year 2000, and I don't want you to bother with it today, but on page 60, section 343, it says: Report on use of employees of non-federal entities to provide services to the Department of Defense.


I think know the answer, but the law calls on the secretary of defense to provide a report and give information. It has some caveats in it to the extent practical. I think your answer is going to be, it isn't practical. Get us a formal response to why we don't have the report and why you can't, if that is the case, provide the report.


DISNEY: Yes, sir, we'll do that.


BATEMAN: OK.


Well, I believe that is certainly more than enough time for you all to have spent at the witness stand today or at the table. We do appreciate your being here and your testimony. If you would be so kind, we may have further questions that you can submit answers to for the record.


And we adjourn with our thanks to the witnesses.


END


NOTES:
Unknown - Indicates speaker unknown.
Inaudible - Could not make out what was being said. 
off mike - Indicates could not make out what was being said.

PERSON:  HERBERT H BATEMAN (92%); SAXBY CHAMBLISS (57%); JOE SCARBOROUGH (57%); WALTER B JONES (56%); DUNCAN L HUNTER (56%); JAMES V HANSEN (55%); CURT WELDON (55%); LEE TERRY (54%); SOLOMON P ORTIZ (53%); DON SHERWOOD (53%); NORMAN SISISKY (52%); CHRIS JOHN (52%); ROD BLAGOJEVICH (51%); ADAM SMITH (50%); JAMES H MALONEY (50%); MIKE MCINTYRE (50%); 

LOAD-DATE: March 16, 2000