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Under Secretary Chu Briefing on the National Security Personnel System

Presenters: David S.C. Chu, USD (Personnel & Readiness)
June 10, 2003 10:00 AM EDT
Staff:  The speaker this morning is Dr. Chu, to talk about the national security personnel system.  This is going to be on the record.  And Dr. Chu needs no further introduction, so.

 

     Chu:  Thank you very much.  Good morning, everyone.  How are you all?

 

     Q:  Good.

 

     Chu:  I'm at your disposal.

 

     Q:  Oh, shoot!  (Laughs.)

 

     Q:  Tell us about -- (Laughter.) --

 

     Chu:  Would you like me to give a little summary for you? Okay, I'd be delighted to.  In fact, I would like, if I might, to set this in a bit longer historical context, because I think there are two common threads that come together here in the proposal that the administration has made to the Congress, and that very much reflects the secretary's direction and charge to all of us.

 

     One thread, of course, is the long series of good government studies that have argued that the nation needs to bring into now the 21st century -- these studies, of course, go back 10, 20 years, so many of them argued we should bring ourselves into the late 20th century -- but we need to bring into the 21st century how we manage the civil personnel of the federal government.

 

     And you all know the broad history here, which is that there was a titanic struggle in the 19th century over this question between what some would call the Jeffersonian model, which emphasized an aristocracy as its theme, and the Jacksonian model, which emphasized responsiveness as its theme.  The outcome of that struggle is in the Pendleton Act, which I think is roughly 1883, which sides with the Jeffersonian model in reaction to what some saw as the corrupt favoritism that emanated from the so-called spoils system that President Jackson -- what President Jackson wanted to be sure was that the government actually responded to the direction of the chief executive.

 

     And what I would emphasize about history is that, therefore, some of the ideas about how we deal with these issues go back, really, a century and a half, or more, in terms of intellectual origins.  And it also, I think, is important to keep in mind what were the government's functions in the late 19th century.  This was largely an administrative apparatus.  Remember, this is even before the income tax is part of our tax structure, so the way we collected taxes was tariffs, to a certain -- to an important extent, how we did business, a very different era from what we have today.  And the Rule of Three, I'm told by the academics, actually dates from roughly the mid-19th century as an idea about how you would carry out, how you'd administer a merit appointment system.

 

     So you have a series of good government studies in the late 20th century and the opening years now of the 21st century that have argued, gee, things have changed a lot since that period of time; we need to modernize.

 

     And indeed, the Congress itself, I would argue, has not only heard this intellectually but heard the problems in the various agencies with the "traditional" -- I'd put it in quotes -- the "traditional" roles of the U.S. Civil Service, and has acted on those issues on an agency-by-agency basis.  So, for example, in the early 1990s, the Appropriations Committee of the Congress took the FAA out from under Title 5.  Title 5, as you all know, is the classic -- not the only, but the classic repository of United States rules on how you would administer the civil service.  And indeed, a quarter of the government today, a quarter of the government positions today are in the so-called excepted service, meaning excepted from Title 5.

 

     That is, by the way, how the Transportation Security Agency was set up by the Congress when it was created roughly a year and a half ago. And it's the reason, in fact, that TSA was able to hire 40 - 45,000 people -- I think most of us would agree, of good quality -- in so short a period of time, notwithstanding the -- you know, in any situation that numerous and that aggressive, you are going to have a certain number of errors made, and those have been tallied by some of your colleagues in the media.  And the excepted service means that they operate outside the Title 5 rules.  And especially on hiring practices, they can do things somewhat differently.

 

     So that's one thing.  You have all these good government studies. And most recent is the so-called second Volcker Commission, which issued its report just about in the last six months calling for, I think, two important things.  One, that personnel systems ought to be more agency-specific.  That the notion, really, governing the 1883 act, which is we could have one set of rules and it would apply to everybody, really isn't going to work, given the rich set of tasks the federal government now undertakes, very different from the late 19th century in terms of what the federal government does.  And second, arguing for much more performance-oriented kinds of reward systems as a way of structuring personnel policies.  So that's one thread, the sort of broad history.

 

     The second thread that I'd like to bring into the conversation is really the direction of the Congress again, starting with the end of the Cold War, about how should the Department of Defense be shaped.  And you all remember how the Congress decided that there should be -- as a matter of statute, a Quadrennial Defense Review.  And in fact, in the first Quadrennial Defense Review, appointed a national -- or required the appointment of a National Defense Panel that would essentially grade the secretary of Defense's homework.  It was, I always thought, a somewhat insulting arrangement, especially because the secretary of defense turned in a draft of his homework, and they were to give sort of a preliminary review.  It's like when you do your English paper when you're in middle school; you know, you turn in a rough draft and the teacher says, well, you have it all boxed up here; you ought to try something else.  And that was the structure.  And it was the National Defense Panel, in its final report that, as you all recall, I know, publicizes this term "transformation" as being the future focus of how defense ought to guide changes to meet the kinds of challenges we'd see in the 21st century.

 

     The president picks up that call in his Citadel speech, as a candidate.  It is central, as I understand it, in his instructions to the sitting secretary of defense, when he was appointed -- in other words, your job, Mr. Rumsfeld.  Now, we're saying everything else that has happened in this last two and a half years, your job is to transform this department.  It was a hallmark from the beginning of his stewardship of this department.

 

     And so there comes this whole question of well, why now, what's the hurry, et cetera.  What I'd argue is, this is not a new set of developments; this emanates from years, if not in the case of the good government reviews, decades of calls that we need to modernize these processes.  And in terms of the defense department, it's really the last 10 years in which Congress has been properly insisting the department rethink itself.  And, of course, Don Rumsfeld's September 10th, 2001, speech -- a speech worth getting out and rereading -- gives a big speech about transforming business practices, which ultimately is what this is all about, where an important business practice is how do we staff the department.

 

     And as you know, the legislation we tabled on April 10th covered the active -- some change in the active side, some change in the reserve side, but also -- and that's what's gotten the most attention in many quarters -- changes regarding civil personnel and our proposal for a so-called National Security Personnel System.  Because our civilians, as we have emphasized in one presentation after another, are an integral part of this total force, or really, I think, might more useful to be called one force -- it is one force.  But we find ourselves increasingly unable to use civil personnel in a way that both their talents might best permit, and that the nation's requirements demand that we proceed.  And why is that?  I think there are really three big sets of changes that we need to consider, and these are embodied in the statutory provisions of the proposal.

 

     First comes back to staffing.  We cannot really compete in the modern marketplace for talent very well with the tools that we have, importantly because it takes us too long.  And so our -- Defense is better than most federal agencies.  The secretary's testimony has quoted the federal averages; Defense has averaged about three months -- the federal government as a whole, as I understand it, is somewhat longer than that to hire somebody.  You go to a college job fair, for example -- and that's the sort of obvious extreme case, but I think it's true for anybody in the job market -- and you tell them it's going to be three months before I can give you an answer.  That young man or young woman, or not even so young man or woman, is typically not going to wait for you.  They have got to be awfully committed to your cause to sit it out that long.  And so, we need to be able to act more promptly than is the current case.

 

     And there are all sorts of derivative aspects of this that come out of the years, indeed, decades, of prescriptions that have been laid down of how you have to conduct the hiring process.  And I find very interesting a recent study by the Merit System Protection Board that took a sample of federal job vacancy notices and evaluated them; evaluated them for how well they met legal requirements, evaluated how well they sold the job, how attractive they were to potential applicants, et cetera.  Well, we got very high grades on legal requirements.  Fine job meeting the letter and the spirit of the statute.  We got failing, abysmal grades as an executive branch on how attractive was this ad -- could someone even navigate this ad correctly?

 

     And that is a complaint I have personally been subject to from at least one of our commanders and from others that I have spoken to; and that is it takes an expert to get through the application process successfully.  As I have testified, the commander -- (Inaudible.) -- commander in the Army, wrote me how he -- about his difficulties, having gone out to recruit young engineers to work on future vehicle-type developments in the United States Army, and he gives them the application materials, and they don't even come up on the list to be considered.  So you can see the frustration here.  He's recruited people; from his professional perspective, they meet the standard. And after all, in some sense, he is the customer.  From their perspective, they want to consider this opportunity.  They don't even make the list that we can look at as a legal matter.  Why?  Because in many of these cases, the arcane nature of what you have to do to qualify is sufficiently complex that -- now, these are near-college graduates.  This is not someone who was barely getting through a literacy examination.  They can't get through the application material successfully to get themselves qualified.  That's a terrible indictment, in my judgment, of what our process looks like.

 

     And I have had others inform me that the way you do it, if you know what you're doing, is you sit someone down at the elbow, someone you want to make sure he or she comes up on the list, and you make sure they go through that application form -- and there are the right code words to put in the blanks.  That's a terrible way to run a railroad.

 

     But it's broader than that.  We have all sorts of restrictions on whom we can hire -- how we can hire them.  And so, we're asking in the proposed statute that we relax some of those restrictions.

 

     For example, if you're an annuitant of the federal government and you wish to come back to work for us, we have to decrement your annuity.  Now, I know why that was enacted; that's to prevent double- dipping.  And we don't really want to encourage people to stop working on day T, and then on day T-plus-one, come back to, quote, "their old job" and, you know, increase their salary by (Inaudible.) percent.  That's not where we're going.

 

     But when people get ready to retire, for whatever reason -- personal, geographic -- they're ready to retire, they leave the routine they have been engaged in for many years.  But they may decide after a period of time -- this happens frequently -- that, "No, some work would be nice, and maybe when I retire to New Mexico, I'd like to do something; it's not my old agency, et cetera."  But they face a huge disincentive to come back and work for us, because, if they do on our payroll, we'll take away from their annuity, dollar for dollar, effectively.

 

     Well, why should that be?  Because what happens in this situation is if we really want you, we go tap a contractor on the shoulder and say, "Gee, we need to fill this need.  Now, we can't hire this pool of people here; you can hire this pool of people."  So your federal retirees come back and they work for a contractor and it's all solved.

 

     But that's not necessarily the right status.  It may not be the most efficient way to do it.  And we'd like to be able to hire annuitants directly, importantly because we have a whole generation change we need to make here.  You all know about the age imbalance of our workforce.  Like all federal agencies, our workforce has sort of a U-shaped distribution in terms of age.  We have a lot of people at the senior end.  The standard number is, in five years or so half could retire.  That's a bit of an overstatement of what's going to happen, but it is an indication of the problem ahead of us.  We have very few people in the middle because we did very little hiring in the last 10 or 15 years, both in defense and other cabinet departments; and we have a reasonable number at the very junior end; we have nobody in the middle.  And so we need mentors, among other functions we need to fill here, and we're not going to get those with the kind of prohibitions against hiring annuitants that are in our current law, including decrement to those who are drawing social security.  And we'd like that -- we'd like that relaxed.

 

     Yes, please?

 

     Q:  What do you mean by annuitants?

 

     Chu:  Meaning they get an annuity from the federal government.

 

     Q:  I thought that the double-dipping for at least military -- for the military folks has been eliminated.

 

     Chu:  Bingo.  And that's one of the reasons we've advanced this proposition.

 

     Q:  What do you mean by across the board?

 

     Chu:  We're going across the board.   Why should we tie the government's hands? Now, if you think -- and I think I would put, just as you're suggesting, the -- it was the Congress, really, it wasn't the Executive Branch, on military annuitants who said, "Let's change the law."  I think we can show our record is one of good stewardship in terms of whom we hire on that basis; in other words, we don't abuse this power, we don't create unseemly situations with this authority, but it does give us the ability to bring back people, maybe in a different role, but who have the skills, the institutional knowledge, the mindset that we might need for positions the government really needs a civil servant.

 

     Please.

 

     Q:  Sir, can you clarify the point that you two were just talking about?

 

     Chu:  Several years ago -- about three, I think -- the Congress -- it used to be the case that if you were a retired member of the United States military, and you came back to work for the United States federal government, that you suffered a diminution of your pension -- the rules varied by your status, so I won't go into those complications -- a diminution of your pension, because you were working for the federal government again, which created a huge disincentive, for obvious reasons, to work directly for the federal government.

 

     So what happened in the services and exactly what's happening with retiring civil servants is, the department has turned to a contractor, who could legally hire those people at full salary, without any offset to their pension.

 

     Now the origins of these prohibitions, I think, were well- intentioned.  It was to preclude so-called double dipping, the notion that somehow you'd stop, you know, one day doing your job, and we'd hire you back in the same job, effectively abusing the taxpayers' money.  That's not the intent here, and I think we've demonstrated we can administer this in a way that meets everyone's expectations.

 

     Our proposal in the statute in front of the Congress is, why can't we do that for civil servants?

 

     Q:  You're saying because you are able to do it and it's working well, in that --

 

     Chu:  In the military side.  Why can't we do it for civil servants?  Because the effect of the current law, which precludes it, is to shut us off from a set of talent.  So that's all part, in my judgment, of this broad question that we're raising with the Congress of staffing.  In other words, how do we staff this enterprise?  And shouldn't we have a more modern, more responsive, more competitive set of tools with which to staff this enterprise?  Which goes to these issues of whom can you appoint in the first place, how do you appoint them.

 

     The second big set of changes we need to make is, how do we pay people?  As you know, in the federal civil service today, the way you decide on someone's salary, at least as a starting point, is, you write a job description, it gets classified into the right bin, and that gets it a grade.  And you go to a table and you look up what the grade is.  And let's say the grade's GS-9.  That, within a fairly narrow range, tells you what you can offer.

 

     Well, as you'll note from this description, this is divorced from the marketplace.  There's no marketplace test in this process.  No one looks out the window and says, "Gee, junior accountants in Houston are making $45,000 a year.  If I want a quality junior accountant and I'm in Houston, I will have to pay $45,000 a year."  Instead I say, "I have to pay a GS-9."  Now maybe that's $45,000 a year.  Maybe it's some other number.  And so what you have is a system that -- it's like the watch that is stopped.  Twice a day it'll be right, but it's only accidental that we get the right salary number in there.

 

     Now of course what happens is people go back when they find they aren't competitive, and they tinker with the job description.  But that's running the system backwards.

 

     The right answer is, I should be able to meet the marketplace standard.  What's happening today is, in some cases, I can't compete. This is a chronic problem for many of our technical facilities, including the space facilities.  It's a chronic problem with our medical facilities, particularly for non-degree-holding people; in other words, not the -- for the nurses and doctors I think we have other kinds of instruments we're allowed to use.  We need to be able to be more competitive in these areas in many locales.  In other areas, frankly, these salary scales can be generous in character because the classification is built on a national model; it doesn't take into account the local job conditions.

 

     And to get to this better situation that we need, what we'd like to do is borrow a concept that has been tested successfully for the better part of 20 years, starting at China Lake.  The department has had authority over the decades for what are called demonstration projects.  In other words, we can go out and do something totally different from Title 5.  We've done that.  We have nine demonstration projects running today; cover 30,000 DoD employees.  The oldest is at China Lake.

 

     And a centerpiece of most of these demonstrations is what's called pay banding; in other words, we do not pay people the way I've just described, the classic system.  Instead, we say there's a small number of career fields at this installation, or in the Department of Defense as a whole, as we would do it.  For each of these career fields, we establish a set of pay bands, some small number -- three, four, five, something like that.  And essentially they're pegged -- there's a range for entry-level salaries, there's a range for journeymen salaries, a range for expert salaries, a range for the most senior people, as the case might be.  So the person who applies competes for a career field and a pay band within that career field. There is the merit principle, the Jeffersonian principle preserved. But within that pay band, it's the supervisor's decision what offer to make.  So in other words, we're constrained not by the general schedule, which is the way we do it today, but he or she is constrained by the budget, which is the way we should operate; the way the law of the land operates, by the way, since we're not supposed to run a slot-oriented system anymore.

 

     There is a further important element to pay banding that I think is worth calling to your attention because it is the way we would proceed if we got the authority from Congress, and that is when it comes to changing people's pay.  There will be two basis  for changing people's pay.  One would be your job duties change.  So I come and ask you to do additional things; this is worth something to me as a manager, it ought to be worth something to you as the employee; I can just make that change.  Today, if the job duty change is going to take you to a different pay grade, we've got to recompete that job.  That's really an awkward, time-consuming process; makes the whole civil service structure rigid and unresponsive in character.  Even leads to unusual situations, which I have personally encountered, actually, where people say, "Oh, no, no.  No, don't add to my job duties because you'll have to recompete the position; I might not win."   And that, I think, is a terrible mindset to have out there as the incentive structure with which we confront our people.

 

     So in pay banding, one of the important powers is that as long as you stay within the band, you can add to someone's job duties and compensate them accordingly without having to go through -- (Inaudible.) -- compensation decision.  Which is, again, part of the whole need to make -- response needed to make this more agile its character.

 

     Second --

 

     Q:  What about the steps in the GS cycle?  Does that have to do with how long people are in that grade?

 

     Chu:  They do have -- the steps have to do -- yes.  In the GS -- in the old GS schedule, which is a system we want to move away from, you have steps within the grade, and people can move up the steps based on longevity or as a matter of merit.  So, there are two ways you can move along.  And that gets to what's, I think, most people's concern with the general schedule salary system, which is most of the rewards are driven by longevity, not by performance.  And that's the other big aspect of pay banding that's worth calling out. It's a controversial aspect, I acknowledge, especially in the union ranks.  And that is that besides job changes, the other big source of pay changes in pay banding is performance.  In other words, you create a pay pool with the money you would otherwise have for the so-called within grade increases.  Indeed, with an annual salary increase and the bonus pools, you have a great pool of money, and you allocate that disproportionately to your best performers.  And the mechanics of how you do it can differ among various systems.

 

     And for those of you who are interested in what pay banding might look like for this department and how the performance system might function, were we to get the authority from Congress, I would urge your attention to our notice in the Federal Register of April 2nd of this year.  There is, I think, 20 or 21 pages of dense, single-spaced text.  But it does describe in considerable detail how would we actually administer this system, were we to receive this authority from the Congress.  I'll come back to that point in just a second. But the table in there shows you the pay bands we propose and how -- and the five career fields we've proposed for the Department of Defense, were we to get this power.

 

     The -- so, a second big change was in how we pay people; allows us to be more responsive to the marketplace, where it comes back to staffing issues again; allows us to adjust job duties over time and compensate the employee accordingly, quickly; it allows us to reward performance, which is one of the things our own people, in the surveys that the Office of Personnel Management conducts, have criticized about our system.  We don't -- the good performers, at least as we read these materials, are resentful that they get the same reward, because it's so much driven by longevity, as the person who is just sort of getting by and just barely making it in terms of contribution to the organization.

 

     The third issue that we would like an enlightened set of powers on is how we bargain with our unions.  This has been misunderstood in some quarters of how we're going to end collective bargaining rights.   Nothing like that is intended -- really, permitted, by the proposed statutory changes.  What we do want to do is move for those human resource issues that are cross-cutting -- in other words, affect more than one place or one local -- to national bargaining unions. Currently, we must bargain on issues at the local level.  We have, in the Department of Defense, 1,366 locals, if you include those from the nonappropriated fund entities.  That is a recipe for long delay in taking needed steps.

 

     And the classic example we've offered is the travel card. Standard measure in any organization is if you use something like that, is we garnish your salary if you don't pay it.  We still have about 20 locals to go -- we actually -- I think it was last administration started this bargaining process -- 20 locals to go before we've got the travel card issue settled.  And you have some issues -- one particular case comes to mind, where there's a local -- an issue that dates back to 1990 is a local out there we still have not reached resolution on that particular human resource issue with.  We think it'd be more constructive to bargain the cross-cutting human resource issues -- I'll get it for you; I can't remember off the top of my head what the issue is out there -- more constructive to bargain at a national level.

 

     And so this is not an end to collective bargaining.  It is a change in how we would conduct collective bargaining.  We think it's a change that's meritorious and that would actually be better for our people because we'll -- why is it better for people?  All these changes effectively make the civil service a more attractive alternative in terms of how we solve our human resource needs going forward.  And hence the question -- answer to the question, Why do we want to do this now?  Just as I tried to bring into this conversation the whole transformation agenda, of which this is a part, that agenda is going to change the shape, the face of this department over the next several years.  A number of slots now occupied by military personnel will probably as a result of that be converted to civil status, perhaps a quite significant number.  We have a lot of military personnel doing things we don't absolutely have to have military personnel doing.  One of the reasons for that is that the military personnel system is so much more flexible.  I can change compensation easily to meet market needs.  I can change people's job duties as the circumstances demand.  I reward performance through a promotion system, basically.  And so I've got a much more flexible instrument in my hands, and it's understandable when people say, "Oh, I don't want to deal with the complicated set of civil service rules.  I will just go to -- I'll get the military to do this.  Or I'll get a contractor." And hence the number the secretary quoted in the testimony in which you look at the 10 - 11,000 civil personnel we had in the Gulf during the most recent conflict with Iraq, over 80 percent were contractor personnel.  And that tends to be people's outlook for a variety of reasons.  Sometimes that's the right answer, but not always.

 

     And as we make this big shift from military slots to civil, that is likely to take place here, and as we reset this force -- and you've all seen General Jones' comments about changing the force structure in Europe, bringing units home, and so on and so forth -- that's going to put new functions in various spaces.  We're going to have to make staffing decisions about those.  We'd like to open the opportunity at least to have some of that carried out by the civil service.  And hence, our urgency about trying to get Congress to give us -- give us these authorities.

 

     Now, in terms of the statutory situation, the House Armed -- the House Government Reform Committee.  Let me step back.  The House Armed  Service Committee, as I understand the way we want to phrase this, sequentially referred the civil service aspects in our proposal to the House Government Reform Committee.  It held a mark-up this year.  It changed some of these things around.  It gave it to the House Armed Services Committee, which changed a few things, on its own, around.  It -- that set of proposals, which is in large measure the spirit of what we'd asked for, even though some important details are different, and some things that we asked for we did not get, I should acknowledge -- and that whole measure is embedded in the House Armed Services bill, which was voted on favorably -- overwhelmingly, I might add -- by the House in -- as you know.

 

     The Senate bill is silent on this, but Senators Collins and Voinovich have produced their own proposal, which does not go quite as far as the House bill.  And so this will be -- and that's really out there as a marker; it's not actually embedded in the Senate Armed Services Committee bill.  And that is -- therefore, this whole question of what we do on the national security personnel system is a conference issue.

 

     Now to this question of "Well, are we are ready," which is one of David Walker's concerns -- "Can we do this?" -- we think we are.  And I would -- I would again cite the history of the demonstration projects that go back over 20 years or so, China Lake being the oldest one.  The Congress itself in the last dozen years -- really, since the early 1990s -- has been the one pushing more demonstration authority at the department.  Look at the history of the National Defense Authorization Acts in that decade.  Every other year or so you see the Congress us some additional authority.

 

     And one of the things we want to do is to use the authority already given us to the limit.  And they have given us broad authority over three communities.  One is the intelligence community.  I'll come back to that in just a second.  Second is the laboratory community, and the third is the so-called acquisition workforce.

 

     The last two total about 130,000 personnel altogether.  And that is why you have this notice in the April 2nd Federal Register.  We have -- we began in March of 2002 to look at what were the lessons learned from these demonstration projects over the last 20 years or so, and to distill what we decided to call the best practices from those demonstrations, and equally important, to get the department to agree what those best practices are.  In other words, this is not a diktat from my office.  This is a consensus document -- and so each person has a little bit different view as to which parts he or she loves in this document -- consensus document, describes best practices and argues that we ought to extend them to the full extent allowed by the statute.

 

     And the Federal Register notice you saw published April 2nd of this year is the regulatory step, the first public regulatory step necessary to do that for the laboratory workforce.  So that triggers comments, we'll get those comments, we'll react to those comments, we'll go to a final as quickly as we can.  So with that, we will bring the laboratory community under something that resembles about 75 percent of what's in the House bill.  So the House bill goes further; gives us a series of things that we never had authority in the administration project, you know, of which hiring annuitants is one of the most important ones.  But we can already do a great deal for a significant fraction of the workforce.

 

     The next step, which you'll see a subsequent Federal Register notice for, I hope, sometime this summer, will be the acquisition workforce, which is an even larger community.  Now, in each case, if it affects a unionized location, we have to then go bargain with the unions over this set of changes.

 

     We are in conversation with the intelligence community about carrying out an injunction the Congress gave us on intelligence personnel, several years ago, to create a so-called Defense Civilian Intelligence Personnel System.  So we've basically set the intelligence personnel outside of Title 5, in Title 10 of the U.S. Code.  And then said you ought to create a single, cohesive system. Well, at the moment we have a whole variety of different systems.  So again, the challenge is how to bring that into a cohesive whole.  We will use, I think, for that purpose the National Security Personnel System as our model.  We may have some tweaks and differences that respond to the peculiarities of the intelligence community, including the history of how we got to where they are.  That's still a matter of conversation within the department.

 

     Sir?

 

     Q:  Could you just give us an idea of the time frame involved here?  Secretary Rumsfeld, when asked in Congress about stresses on the active duty forces, says, well, give me this authority to redo my civilian force because then they can take up a lot of the military jobs in order to reduce the stress.  The stress is on the active force now.  You've described a process which has taken decades.  I mean how long --

 

     Chu:  Well, it has taken decades.

 

     Q:  If Congress passes this year, how long can you get the stress off the active force?

 

     Chu:  And that's one reason that we are impatient to move forward.  It comes directly to the question that some members of Congress say, "Well, why now, what's the hurry?  Shouldn't we study this some more?"  Our response is:  We have studied this for years. We have experimented for years.  The time now is to decide and to move forward.

 

     On implementation, we are ready, as the Federal Register notice demonstrates, to begin right now.  So we're going to start with the laboratory workforce.  One of the issues in terms of the effective dates from the people concerned is do you want to line the performance period up with fiscal years?  And if you decide to do that -- and there are some advantages to that; there are some disadvantages to that as well -- to do that, that will mean you have to either start, in terms of affecting someone's daily life, either 1 October of this year or 1 October of next year.  But that's the time frames that we are looking at.

 

     Now, we will not necessarily line everything up on fiscal years. We could also do partial-year transitions.  There are a variety of answers there.  A bottom-line answer to your question is, our agenda would be to get much of this done in the next one to three years. This is not a lifetime research project.  And it depends on the Congress giving us authority, given that authority is granted and so on and so forth, as you can see from this description of the number of regulatory steps we have to go through.  But this is here and now.  We are ready to move forward.

 

     Sir?

 

     Q:  One problem -- kind of heartburn with, you know, the civil service unions -- (Inaudible.) -- is that unlike the civilian community, the commercial sector, where management tends to be stable, the leadership of departments change over with elections because you put political appointees in and they now have authority to selectively reward, hire, et cetera.  That you go back to the political influence. That there is turmoil and potentiality for favoritism based on the political leadership that comes in with a new regime every time you have an election.  And obviously, there's a concern about you're taking away the Civil Service Protection Board and their role.  How do you answer the criticism that politics will get back into the system?

 

     Chu:  The short answer is we aren't putting politics back in the system.  This has probably been the most significant and, I think, malicious distortions in this debate.   I'm outraged by it.  The set of prohibited personnel practices that you are alluding to, which includes political -- making appointments political, engaging in nepotism, so on and so forth, those are all still prohibited.  And one of the things in our legislation we proposed is that the section of the U.S. Code -- that is Chapter 29 if I recall correctly -- where these are listed all be reiterated as part of this system.

 

     Now, what has given those who have raised this charge an ability to assert it is that these prohibitions are repeated in the U.S. Code in other chapters, some of which we propose to waive, but we from the beginning have emphasized, no, we are not proposing nepotism as being a permissible personal practice, we are not permitting -- proposing cronyism as being a permitted personnel practice.  We are respecting all the classic things that make the civil service good.

 

     So I -- my own view is these charges are, frankly, groundless if you actually read the text of the proposed legislation, including how the House Armed Service Committee brought it forward in this bill, which, if anything, tends to strengthen these elements rather than weaken them.  I think it's an unfounded charge.  It's not where the legislation permits us to go.  It's not where we intend to go.  It's not in our interests to go there.

 

     And I would point out, the department has run -- and this goes to the issue of who should have oversight, because we are proposing to give the secretary, and the House bill does do so, a bit of added power, vis-a-vis the Office of Personnel Management, in administering the system -- the department has run a much larger, and in many ways more complex personnel system for, low, several decades quite well on its own, with Congress being the body of oversight, and that's the military personnel system.  Much larger.

 

     Yes, sir.

 

     Q:  Forgive me if it's a simple question.  Isn't it accurate to say that this is -- you're asking for the ability to make it easier to fire somebody if they're not performing.  And if the person who's assessing that performance is changing every four to eight years, I imagine what's considered good performance under this administration is different from what it would have been under the last administration.  I mean, that seems to be some part of the fear that people have that, well, what might have -- I might have been considered to be doing a great job under the last secretary, but now under this secretary, I might not be.  And maybe the criteria for judging whether or not I'm doing a good job might not necessary -- you might not fall under cronyism or nepotism, but, you know, I'm doing my job; I'm coming into my desk every day, but -- does that make sense?

 

     Chu:  Frankly, no, it does not make sense, because I think it imagines that we're running a small office of 25 people.  We have, if you count all flavors, close to a million civil personnel on the payroll of this department.  The notion that even if one wanted to go where you pointed out -- I mean, that's not where we want to go, nor what we would be able to do under the proposed system -- the notion that somehow that's even feasible I think is laughable in a system of this size.

 

     Now, to the specific question of what should count for dismissals.  If anything, the decades of good government studies have pointed out that -- and our own employee survey response underscore that one of the central criticisms of the federal civil service is that poor performance is too lightly dealt with.   Supervisors tend not to engage on it, because when they do, it is a very laborious process to end someone whose performance is poor, and we are often overturned on this issue.  So I have documented cases, which I'll be glad to give you; these are in the public record.  We have a case where a supervisor backed a female employee -- male supervisor backs the employee into a closet and makes amorous advances.  We tried to dismiss him on grounds of sexual harassment.  The appeals process, which takes forever, decides no, he's merely showing romantic inclinations.

 

     Different case:  Female employee tries to run her supervisor down with her automobile.  Now, you know, the man is knocked to the ground. It seems to me sort of -- kind of open-and-shut here.  You would think that this is grounds for dismissal.  No, like the first case I mentioned, the person -- after it goes through all the appeals process, the Merit System Protection Board is suspending the individual for a number of days.

 

     So we have a process, which is noted.  And as a result of all this, when you -- when a supervisor, who has to document this conduct, has to see it through all those hearings, sees that in the end the system does not sustain him or her in taking action against a problem employee, I can understand when supervisors say, "You know, life is short.  I'm just not going to make that effort."

 

     You look at the -- down to the statute itself and to how the regulatory rules govern terminations, should there be a reduction in force, specifically.  The last criterion in that list is performance. That is the wrong answer in the early 21st century.

 

     Q:  So you can tell the workforce -- a new person coming in, a new political appointee --

 

     Chu:  This has nothing to do with the political appointee. The bulk of this workforce is supervised by career civil servants. You have a tiny layer -- this department actually is probably below average in the political appointee layer.  There are only 40-odd presidential appointees subject to senate confirmation in this department, at the -- at least at the OSD.  I think that's the total for OSD, I'm recalling correctly.  I'll get Cynthia to check this number for you.

 

     You know, the political layer is tiny.  They supervise a small headquarters.  They supervise the headquarters all -- for the most part.  The bulk of the employees in the department are supervised by other career civil servants, who have every interest in following the rules and in doing this correctly.  And we have every interest in following the rules.

 

     And again, let me point to the military personnel system, where we do operate a structure, again without the kind of extraordinary -- where the appeals process is within the department.  This is the one of the issues on the senate side, in terms of how the senate bill is constructed, versus the house bill.  We do operate an appeals structure inside the Department of Defense.  So you can appeal your court-martial conviction to the Court of Military Appeals.  But it's within the department, and the institution understands the business of the department and where we need to go -- and get effective results.

 

     I think everyone sees the military justice system as well-run. So, I think we have a track record here in this institution that demonstrates we do not indulge in favoritism of that sort.  Is it not in our interest to do so.  We're, after all, judged, properly, by the citizenry and by history on whether we can, indeed, fight and win the nation's wars.  That's a standard that requires we have the best people, the best motivation.  There is no room for cronyism, for nepotism, for favoritism in that kind of situation.  We need to have a workforce that is hired on merit, that is evaluated on merit and promoted on merit.  So, there's no interest on the (part of the organization ?) at the kinds of misadventures that the critics are describing.

 

     Sir?

 

     Q:  On the hiring process, how much of the delay and the difficulty in hiring people is the fact that almost everybody in -- the DoD employee has to have some level of security screening?

 

     Chu:  That's not the reason for the delay.  We can hire them without the security clearance, give the security clearance later. That's not why there's a delay.  It's the civil service process.  And again, we are -- my understanding is we are better than most federal government agencies.  It's just -- it's a lengthy process.  When you add up the time frames you have to observe, some of which are statutory, you just can't get from here -- you can't go out -- you can't do what we, therefore, turn to a contractor to do; go out and say:  I need a base camp set up over here.  You know, make it happen. So, I'll take an immediate issue: translators for Iraq.  Now, there are some other problems there, too.  But, we're going to turn -- we turned to a contractor.  Much easier, much faster.  I would have preferred to hire someone on the federal payroll.  But I couldn't get there.

 

     Yes, ma'am?

 

     Q:  How does this affect NAF?

 

     Chu:  NAF would be -- the nonappropriated fund enterprises -- we would hope eventually to get to a similar -- NAF already has some features of this.  That would not be an early part of the -- back to your question about timelines -- that would not be an early part of what we would do here.  Down the road, however, our hope would be to bring similar principles to bear on a nonappropriated fund workforce, and to the extent they do not already apply.

 

     Q:  Does that involve an entirely different set of statutes and proposals and --

 

     Chu:  Much of the statutes already would allow us to reach NAF.  Depends exactly how the final bill is shaped.

 

     Yes, sir?

 

     Q:  You've mentioned your potentially significant large number of military slots -- (Inaudible.).  Are you getting any -- you know, as you go -- you're many months into really working hard on this process -- are you getting a sense of how many that will be, or at least an inside and an outside?

 

     Chu:  The secretary has used the figure repeatedly of 300 (thousand) or 320,000; 320,000 a year comes out in the Task Force on Defense Reform that the last administration constituted.  You -- obviously, it depends on what you're willing to judge is a civil function.  But the bottom line answer is yes, there are big numbers, potentially, that could be converted.

 

     Now, whether -- this is a bit like A-76 competitions.  And I don't want to mix these subjects in your mind because that's a very tender issue for the unions, who think this is somehow all geared to A-76.  It's not.  It's independent of that effort.  But, it's been, like I said -- (Inaudible.) -- you can consider its transfer; you can, at the end of the day decide, no, I'd rather have it as a military slot.  But it goes to a lot of the support-type jobs.  So it ranges from the minuscule -- my favorite personal example is I've had the privilege over the years of visiting the Naval Postgraduate School at Monterey; it's a lovely, lovely facility for visiting personnel.  And often the person behind the desk, in the past, at least, has been a Navy yeoman.   Well, it's lovely, but I would hardly consider it essential it be a uniformed person.  It's nice.

 

     Two issues which are the -- (Inaudible.) -- point between the administration and the Congress, which is the question of who provides force protection, who does security.  And, of course, one of the issues there is does it need to be federal employees or could it be a contract operation?  But one of the issues of the department is how much of the security could be done by civil personnel.  And right here in the Pentagon you've seen a shift within the last few weeks.  You come in through the little gates, we had military police on those posts.  We have now gone to having the Pentagon Force Protection Agency be the one to do that function.  And so that's an example, in my judgment, of a function that was performed by military police now being done by civilians.  We think it's just fine.  There are a variety of other opportunities like that, some of them quite numerous, in terms of when you get down to it.

 

     Other questions?

 

     Yes, sir?

 

     Q:  (To get off this issue?), on the military personnel system.  You've been dabbling for quite some time now and looking at paying up and out, you know, tenure 10 year in positions.  Are we ever going to see any of that, or are you going to fight one battle at a time, fight the civilian fight then take on the --

 

     Chu:  Well, the April 10th legislative package did take all issues on.  Now, on the military personnel front, we really took on two sets of issues.  One is how we manage the most senior officers, the other is the question of how we manage the Reserve forces.  On the senior officers, the Congress -- the House Armed Services Committee, after some towing and frowing, decided not to do all that much this year, although it did provide in its bill an important power that will allow us, will facilitate keeping senior officers -- the most senior officers in particular posts longer, therefore for a somewhat longer career.  That allows us to retire those who aren't going to go to the most senior grades, or actually allows this for all flag officers, but the reason it's important is so we can let those who aren't going to go on to more senior grades retire promptly when that time comes rather than waiting to fill out a minimum tenure required, which current law requires.  Current law is three years tenure required.  We have authority through December 30th of this year to waive it down to two years; the president has some permanent powers to waive it down to two years.  We asked to have that lifted in its entirety for flag and general officers.  The House has given us the authority to waive it down to one year, which is an important advancement, and if we do indeed get that authority out of the conference bill, it will help us in inviting senior officer both to stay at a particular post longer, which we think is very important to effect change -- you can't really change things fundamentally if you're going to change the person in charge every two years or so; just won't work -- and to do more of what the secretary's already done, as you've seen with General Jones, who was invited, after being commandant of the Marine Corps, to be commander of U.S. force in Europe, so that the most senior, most successful officers would perhaps have more than one three- or four- star tour, which we think is meritorious.  That implies longer (tours ?) for them.  It also means you have to move everybody along promptly so as not to let promotion stagnation to occur.  And that's why the power to allow those who are going to leave to leave promptly, which is what the House mark gives us, is so important.  It is a key provision.  Although it's only one of a number of things we asked for, it is a very important provision.

 

     On the reserve front, we have a series of provisions, some of which were actually in our original authorization bill submission earlier in the year and the rest of which were in the April 10th submission, that were designed and are designed to create more of a continuous service for the Reserves, to move away from a paradigm where the Reserves are seen as someone you only train or use 38 days a year, which is the one weekend a month; two weeks in the summer routine, and the actives of 365 days a year, to see this as a continuum ranging from perhaps zero days in a particular year for a reservist of a special talent to 364 days, if that's what you need and the reservist is willing to serve.

 

     Why is this important?  It's important because as you look at our actual needs over time, we have a set of needs, not all of which fit the 38 days a year; in fact, not all of which even fit within the 38 days, one weekend a month; two weeks in the summer.  I've spoken with   the adjutants general about this, for example, and the ones involved with ground forces says, "You know, I'd really rather have three weeks in the summer, and I'll give you back the training days during the year, because that's the more meaningful training opportunity."  And so we want to be able to do that kind of shift.

 

     Take a different kind of example, in terms of continuum of service.  There are a variety of skills that really only exist in their best form in the civil sector.  Information technology is increasingly one of them.  Certain medical skills -- another example.  Linguistics is another.  And before September 11th, who would have thought Pashtun and Dari were something we would want to train in, would do?

 

     And we'd like to be able to reach out to the citizens of the country who have those talents and offer them direct appointments in the individual or the Reserve, with essentially an implicit or explicit contract that we'll only call you this much, but when we need you, we're going to need you a period of time.  That might be six months to a year.

 

     The present rules, again, make it hard to do.  I'll give you a practical example, which we may or may not get relief.  Current law, which emanates from some unpleasant experience in World War II, requires that a military person, before he or she can be deployed outside the United States, has to have 12 weeks' training.  Well, if the reason I appointed you is to get your Pashtun or Dari language skills, in the present situation, I obviously want to give you enough training to protect yourself, but I would rather get you to the theater of concern promptly, rather than waiting 12 weeks while I go through the motions of fulfilling the requirements of the statute.  So we'd like that requirement either waived, removed from the statute or giving us some flexibility in how we have to administer that.

 

     There's a whole series of other impediments within various parts of the statute that have accreted over the decades, that make it hard to do what I've just described.

 

     The bottom line is, we'd like to make the movement from Reserve status to active status and back again as seamless as possible, so that those who are willing and able to serve the nation's interests, but may not be able to serve 365 days a year for 20 years, can do so. And I think the recent mobilization demonstrates there's a large pool of citizens out there who are quite willing to do that.  When the nation needs them, they are delighted to respond and would like to respond, would like to contribute.  But we don't need -- and they cannot do it 365 days a year.

 

     For some people, over the course of a career, it means they may come to a juncture in their lives where they would like to step out of active service for two or three years, but they'd like to come back. That's not part of the current culture.  If you leave active service, the Reserves, it's generally a one-way trip.  There are few examples of people who come back.

 

     We'd like to facilitate those who would like -- if you want to call it stopping out, whatever -- they have a parent to take care of; they may have someone with young children, wants to be with their children in the first few years of their lives, whatever the case might be -- we see inviting them to join the Reserves and then think about coming back later as a way for us to preserve the huge training investment the country has made in these people.

 

     Some of this is just the way we administer the policy we already have.  We're going to do as much of that as we can.  We changed already the issue of the medical benefit reservists, to facilitate this.  Basically, if you -- now if you're a reservist called back to duty more than 30 days, we give you the same benefits as the actives, sort of end the sort of two-class system we had before.  We may make some further changes there, to make this -- to deal with the continuity of care issue, which is a problem for some people.

 

     But some of it's statutory.  So when we reach certain hard points we can't get around without the Congress giving us some leeway -- so a deal --

 

     Q:  What's the status your --

 

     Chu:  Sir?

 

     Q:  What's the status of the legislation?

 

     Chu:  The status is that a high fraction of our original set of propositions in this regard is in one bill or the other.  Very few items are in both bills.  And so this is sort of like a giant lottery, I suppose.   I should -- maybe that's the wrong analogy to use.

 

     Q:  Chinese menu --

 

     (Cross talk, laughter.)

 

     Chu:  (Off mike.) -- that analogy.  And the question is which dish is the Congress going to select, or to order the whole -- we hope they order the full banquet, to keep the analogy going.  And if they do, we will have made very substantial progress on this front.  And I am encouraged, at least with the conversation we had with both members and staff, that people appreciate what we're trying to do here.  It is easy in these changes to misunderstand motives.  And people are always suspicious that there's some nefarious purpose out there, just as some of those suspicions have arisen on the civil front.  And our job is to make sure they understand: here's where we're going to take it.

 

     And what I'd emphasize both on the military front that you raised, sir, and the civil front, we are constantly, properly, the subject of congressional oversight.  The real protection against misapplication of law, because there's no way to write in every contingency in the statute, and you wouldn't want to; it results in very rigid statutory framework for the department.  The real protection is the fact that Congress is going to pay close attention to what we do, and we recognize that, indeed.  Frankly, while we might always not admit so, we really have to welcome it.  Because it is the citizen's protection to make sure that things are done correctly.

 

     Sir?

 

     Q:  That does raise the question, though, that the department is trying to loosen congressional oversight across a lot of -- a pretty broad swab of areas; there's a whole laundry list of reports, et cetera, that the department wanted to get out of, not necessarily having anything to do with personnel issues.  But I mean, is there a pledge here that if you get what you want, that you won't come back subsequently next year or the year after, and try to loosen the congressional oversight?

 

     Chu:  I think that's been misperceived, if I may say so; both the report proposal and the proposal on fund movement.  What we really want to do is modernize this.  And the problem with reports is most reports laid out by the Congress have no sunset clause in them.  Now, these reports -- I mean, I am amazed at the reports my office prepares.  I mean, you would probably quickly go to sleep having to read much of this stuff, which we dutifully turn out every year.  I'm -- with due respect to Congress, I'm not entirely convinced anybody reads it on the other end.

 

     And so, I'll give you an example in the readiness front, where I have offered to can the sort of 1950s-style reports we send up in  favor of giving them access to the electronic database; say:  Look, it's here!  You may look it up, too, you know.  Why should I print, you know, 100-and-some pages of tables, and then I have to write a little essay at the front, which only slows up the transmission of data.  I'm happy to give you the data.  We're not trying to keep it a secret from you.  You, the Congress, deserve the opportunity to see what's being done.

 

     But many of these reports were set down in a much earlier period. They are not much paid attention to.  We're simply saying -- this is not how we manage the department; these reports aren't managerial tools, and that comes to some of the more sensitive issues, like this -- just like -- (Inaudible.) -- reports and so on, so forth.  We don't manage that way.  Why don't we share with you those things that really are managerial we use today, which we'd be glad to do, but let's end -- because of a huge staff resource investment in turning this stuff out.

 

     The same thing is true with the money movement.  The department's ability to move funds around is highly constricted because we still, in the federal government, as you know, operate under an object of expenditure budget, not on a program budget.  In other words, I don't get money to carry out the recruiting function for the Department of Defense, even though that's the outcome for which I'm probably held accountable:  Can I succeed at recruiting the right number and quality of young people every year to join the military of the United States. I get money for military personnel to buy recruiters.  I get a separate set of money to buy advertising with.  Well, suppose I decide in the middle of the year that, gee, maybe I should have more recruiters, kill off some of the advertising.  That's a reprogram; that is a transfer authority issue because it's a different object of expenditure.  And all the comptroller -- (Inaudible.) -- "Guys, let's update these numbers."

 

     To be fair about it, Congress, in a number of these areas on the threshold issue, which is another element of this same problem where they set thresholds in nominal dollar terms 20 years ago, and, of course, the value of the dollar has changed over that period of time -- that Congress has raised the new thresholds in the bill before us; it has stripped out some of the reports.  It has been less willing, I think, to go to financial flexibility that we would like.

 

     But it's not an effort to get out from under the need to report to the Congress, it's an effort to make our actual execution more flexible and more on point, as far as the nation's concerns might be.

 

     With that, let me thank you.  Then we'll all watch to see how this comes out.

 

     Q:  They haven't appointed conferees yet, have they have?  Or have they?

 

     Chu:  Not to my knowledge.  At least not as of yesterday.

 

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