Testimony

July 17, 2002

Testimony of AFGE's General Counsel, Mark Roth before the National Commission on the Public Service regarding employee morale and the human capital crisis.

Crisis in the Federal Public Service

First let me thank the Commission for the opportunity to provide AFGE's "take" on the well-named crisis in the federal public service. I am Mark D. Roth General Counsel of the American Federation of Government Employees. I am sitting in today for AFGE's National President Bobby L. Harnage who regrets that he had a longstanding previously scheduled commitment and is out of town this week. President Harnage has previously testified over the years on the government's human capital crisis, and I believe his views and potential solutions are well-known… but certainly worth repeating for the record before this esteemed body. We would also like to present a more in-depth statement of our position before the Commission's record closes. Finally, let me also commend Professor Light of the Brookings Institution's Center for Public Service for focusing on, and documenting, that there is indeed a civil service crisis and federal employees have become more and more demoralized in recent years.

AFGE represents approximately 600,000 federal employees in roughly 60 agencies throughout government. Our diversity is unmatched as we represent groups such as Border Patrol Agents, corrections officers, scientists, doctors, professional employees, non-appropriated fund workers, blue collar workers, canteen workers and literally hundreds of other types of workers in the fifty states, U.S. territories, and Europe. We are in constant communication with our officers, activists, and members on quality of worklife issues such as alternative work schedules, transit subsidies, childcare, flexplace, pay, and benefits. At our own focus groups, town hall meetings, and Conventions, we consistently hear from our local officers, activists, and members that they feel that they are regularly placed under attack by anti-government politicians and political appointees. At the same time they acknowledge that it is consistently harder to perform their jobs that seem to expand in statutory responsibilities but with fewer employees and less resources. Furthermore, they see a growing "shadow" workforce of contractor employees, often working side-by-side with them who do not have the same commitment to government service and who are not subject to the same restrictive labor laws or Hatch Act. Our members tell us that they desperately want to make a difference in their jobs and provide efficient and effective service to the public but lately, more than ever, they have less of a say over how the work can best be done and they are frustrated.

That there is a human capital crisis in the federal service can not be denied. However, in our view, it is an entirely self-inflicted wound and the solutions proposed to fix the crisis are ill-advised, insufficient, and often inconsistent. AFGE views the human capital crisis as being a result of three specific policies: The directionless downsizing of the Clinton era, the privatization-at-any-cost frenzy of both the Clinton and Bush Administrations, and the refusal to adhere to the Federal Employees Pay Comparability Act (FEPCA), first by the Clinton Administration and now by the Bush Administration. Taken together, these three policies have left agencies without adequate staff, without direct control over far too many of their core functions, and without the ability to pay the existing or prospective federal workforce adequate salaries.

Let's talk first about the pay issue. We were consistently advised by the Clinton Administration that pay methodology was faulty and the lag between federal salaries and their private sector counterparts was really only between 12- 14% and not the 22% we cite. Our response, met by a resounding silence, was, fine, increase pay by the 14% lag you agree with and let's continue to haggle about the difference.

The large and growing gaps between the pay and benefits provided to employees of large private sector firms and unionized state and local government employees on the one hand, and federal employees on the other, is not a mere detail. The federal government pays competitive salaries and provides comprehensive health insurance benefits - to some of its contractor employees. But the government's in-house workforce does not get equal treatment. A decade after a bipartisan federal pay law was signed by the elder President Bush, federal salaries still lag behind the private sector by approximately 22%. Thirteen years after the Congressional Research Service wrote the definitive report showing that the Federal Employees Health Benefits Program was inferior to that offered by our nation's most successful private firms and its largest states by substantial margins, the benefits gap has also worsened. There is no excuse for this --no fiscal excuse, no excuse that the data describing the dimensions of the gaps was not available, and no excuse that unions were intransigent and unwilling to negotiate even partial solutions. We have pleaded with every Congress and two Administrations to address the compensation gaps. All we hear is a deafening silence and cockeyed proposals like the Freedom to Manage Act which calls for flexibility and exemptions from civil service rules without any specifics or any additional funding streams.

Rather than face reality and make the hard decisions concerning the need for increased federal pay and benefits, we are continually confronted by an undefined call for "management pay flexibility" - - piecemeal proposals that call for increasing retention and recruitment bonuses, broad banding systems, and vague pay for performance notions. The truth is most of these bonus and award authorities already exist but agencies are not using them for two very simple reasons - - they are not funded and performance evaluation systems are so subjective and out-of-whack that neither managers nor employees have any confidence in basing pay on them. AFGE is not against bonuses that come from additional funding streams and are based on objective performance criteria.

However, we cannot pretend that bonuses, especially bonuses that come at the expense of adequate staffing or adequate salaries and salary adjustments, will improve the government's ability to recruit and/or retain federal employees. Bonus payments do not count as basic pay for purposes of retirement or annual salary adjustments. If in fact they are designed to recruit for temporary positions or to recruit those with an intention to remain only a short time with an agency, it must also be said that they are not a solution to the "human capital crisis", as we understand it. The government's crisis is that it is on the verge of losing its workforce to retirement, privatization, and more lucrative offers in state and local government and the private sector. When the workforce leaves, it takes with it institutional knowledge, skill, experience, and the public sector ethos of devotion to the common good. Bonuses will not solve such a problem.

I need to emphasize that while the federal service's human capital crisis is being recognized as being at a critical stage, the Administration has issued through OMB a set of arbitrary but "mandatory" privatization quotas. In this regard, OMB has directed all Executive Branch agencies to "compete or convert" 15% of the so-called "commercial" jobs on their Fair Act lists by the end of 2002 and a total of 50% by the end of FY 2004. Agencies must submit their plans to carry out these quotas to OMB for approval. Thus far, while OMB continues its public insistence that the quotas are about competition and not about privatization, plans are being approved that meet the targets with direct conversion, that is, contracting out without competition, of up to half of the quotas. The Administration's quota policy may mean that up to 212,500 of the 425,000 jobs on the FAIR Act quota list will be contracted out without competition.

AFGE does not oppose competitive sourcing. In fact, our position is that federal agencies should be permitted to contract out commercial work, but only if it can be shown through public-private competition to be less costly to taxpayers than continued in house performance. Only through public-private competitions can taxpayers learn whether it is in their interests to have the government's work that is commercial in nature performed in house by federal employees, or contracted out to the private sector. Recently, the federal employees have improved performance to the point where they are winning approximately 60% of A-76 competitions.

The so-called competitive sourcing initiative and the human capital crisis are two sides of the same coin. The federal government's human capital crisis has been almost entirely self-inflicted. The acceleration in contracting out without public private competition sends an unmistakable message to current and prospective federal employees: The government does not want you, it does not think it should employ you, it is trying to find a contractor to take you off its employment rolls. The government does not care if you are more efficient, effective, and dedicated than any contractor would or could be, it does not care if you are less costly, if you have on conflicts of interest - it just wants to give your job to a contractor regardless of cost, regardless of conflicts of interest. The job is going out the door without giving you even the opportunity to compete.

One very important Agency, the Department of Defense has recently acknowledged that it's plan is to automatically replace retiring federal employees with contractor employees. As agencies are forced to privatize half of the so-called "commercial" jobs on their FAIR Act lists, they will increasingly follow DoD's example.

The Bush Administration is taking a schizophrenic position on retention and recruitment bonuses, expedited hiring policies, etc. in the Freedom to Manage Act on the one hand while, at the same time, mandating privatization quotas that simply give civil service jobs away to the private sector without competition or regard to cost. However, we do not want our comments to be viewed as simply castigating the Bush Administration. The crisis began with the untargeted "wrongsizing" of the Clinton Administration during which individuals in critical positions received monetary incentives to leave government or retire early while folks in duplicative "overhead" positions chose to stay. These wrongsizing efforts, further complicated by FTE ceilings restricting agencies from replacing separated employees with new hires, were taken over AFGE's vehement objections. They clearly initiated and perpetuated what is now a full-blown human capital crisis.

AFGE has its own recommendations for civil service reform that we believe are necessary for a true and lasting solution to the human capital crisis. The components of this "package" are S.1152, the Truthfulness, Responsibility, Accountability in Contracting Act, to make sure that contracting out only occurs when public-private competitions show that it is in the public interest; S.1982, Senator Barbara Mikulski's bill to improve the funding formula for the FEHBP to 80% paid by the employer and 20% by the enrollee, to more closely resemble the financing provided by large private and public employers, full implementation of FEPCA so that the federal workforce receives pay comparability and economic stability, and finally, a restoration of labor management partnerships so that labor and management can work together cooperatively in federal agencies to make federal agencies even more efficient, effective, and reliable.

We commend the Commission for taking the issue of the human capital crisis and employee morale so seriously, and we look forward to continuing to work with you to fashion solutions to the government's growing problems with recruitment and retention. I would be happy to answer any questions you may have.

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