SEC. RUMSFELD: Thank you, Strobe, for your hospitality, and Paul Light, for your efforts to promote the cause of civil service reform. I was listening to your remarks, and I take it that when you were talking about government, you were referring to the civil side of government, not the military side, because they -- and the military, of course, is part of government. And my guess is from the surveys I've seen the answers would come out somewhat differently if we looked at the military side.
Paul Volcker, it's good to see you as always, my friend.
The Department of Defense does have a serious problem. The system for recruiting, retaining, managing the federal workforce on the civilian side is clearly not working well -- some would say broken. Paul Volcker put it correctly after he accepted the chairmanship of the commission when he said that government, especially the federal government, is not a favored career choice among our best and brightest. We face a sharp build-up in retirement of those who entered the federal government a generation or more ago, and too many of the good and talented that are still attracted to career service leave too soon, frustrated by their inability to use their talents with full effectiveness. This is very likely a problem across the federal government, as Paul Light has mentioned. But for DOD, which manages roughly a third of the federal civilian workforce, it is more than a matter of good government, it's truly a matter of national security. DOD's mission, of course, is to defend the country from those who might wish to do harm to us or our way of life. And our ability to attract and retain talented people and manage them in a way that utilizes their talents, their creativity and their innovative spirit certainly will determine how well we are able to do that defense. So the stakes are high.
The events of September 11th brought a new urgency, in my mind, to the task of civil service reform. Last year the president and the Congress worked together to create a new Department of Homeland Security with some updated personnel management practices. The task of fighting the global war on terror certainly forces us to recognize that the time has come to bring those same kinds of innovative practices to the work of the Department of Defense.
The decades-old of hiring, firing, evaluating, promoting, paying and retiring DOD civilian employees is in urgent need of repair. Let me offer a few examples.
Today the Department of Defense has some 320,000 civilian tasks that are being performed by uniformed military people. These are jobs that really should be done by civilians. That's more than two and a half times the number of U.S. troops that were on the ground in Iraq when Baghdad fell. Why is that? Well, it's because managers are rational. The managers in the Department of Defense, when they want to get a job done, they turn to the military, because they know they can manage the military personnel. They can put them in a job, give them guidance, calibrate them, transfer them from one task to another, and guide how they perform. Or they can turn to civilian contractors, because they know there, again, that they can manage a contractor. They can hire them, they can get them working at a task quickly without a host of bureaucratic obstacles and delays. Today they can't do that with the Civil Service, because the civilian personnel are really managed outside the Defense Department with a system of rules and requirements that were fashioned for a different era.
This really does put an unnecessary strain on the uniformed military personnel. To have 320,000 military personnel doing jobs that are not military task is not a good thing for the department. It's not right, especially at a time when we have to call up the National Guard, when we have to call up reserves, when we're telling people on active duty who are due to get out and have plans that we have to put in -- effect a stop loss and not allow them to get out.
It also has to be demoralizing for the talented civilian employees that exist in the department. People do come to work at the department because they want to make a contribution to our national security. So when a challenge arises or a crisis occurs, when their skills or talents could be used and are needed, they want their phone to ring. But the phone doesn't ring. Today, more often than not, it doesn't ring for them, because of the outdated DOD civilian personnel system.
For example, in Operation Iraqi Freedom, 83 percent of the civilians that we deployed into the theater were contractors. Only 17 percent were civilian federal workers. Why? Well, it's simple. It's because in most cases the complex web of rules and regulation prevents us from moving DOD civilians to new tasks quickly, and as a result, the department managers understandably turn to the military or to civilian contractors to do jobs that DOD civilian federal employees could be doing.
Also, we're losing talented young people to private-sector competitors. When DOD goes to a college job fair, the person at the next table from a corporation is perfectly able to look a -- that person in the eye, offer them a job, tell them what the bonus is, tell them where they'll be working and when they can start. When DOD interviews the same people, al we can do is offer them a ream of paperwork and a promise to get back to them in three to five months. It should not be surprising that the most talented folks end up working somewhere other than the Department of Defense.
This is a problem that's going to grow more acute with each passing year, as the baby boom generation employees retire. It's -- I'm told that over the next five years up to 50 percent of the federal employees -- civilian employees in the Department of Defense will be eligible to retire.
In addition, the current system also prevents us from, for example, dealing effectively with fraud. Take the recent scandals rewarding the abuse of government purchasing cards, where government employees were found using government credit cards to buy televisions or CD players and the like. With DOD uniformed personnel, if such an abuse occurs, we have the ability to garnish their wages, recover the stolen funds. Not so with civilian personnel. In fact, DOD has been negotiating now, I'm told, for over two years with more than 1,300 separate union locals for the right to garnish the wages of people who use credit cards for personal purchases. And we still have 30 more unions to go. It is unacceptable that it takes us years to deal responsibly with employee theft and waste of taxpayers' money.
If a private company ran its business that way, it would go broke, and it should.
There are other examples one could cite, but the point is this: DOD is working to deal with security threats of the 21st century with an Industrial Age organization that's struggling to perform in an Information Age world, and we simply aren't cutting it. DOD managers are not free to manage the civilian workforce. The civilian employees are not being rewarded for merit. Civilian workers are losing opportunities to contribute as critical tasks as assigned to military personnel and contractors. We're wasting the skills of our uniform personnel on civilian tasks in the midst of a war, and we're wasting taxpayers' hard-earned money to pay outside contractors to do tasks that could probably be better handled internally. And we're losing talented potential employees to private-sector competitors.
This is why President Bush has asked Congress to work with the department to try to transform this system. And we have proposed the creation of a new National Security Personnel System. It's a merit- based system that would give the department more flexibility and agility as to how it manages the roughly 700,000 civilians who work at DOD.
These proposals, I should add, are not coming out of the blue; they're not something that someone just sat down and dreamed up. They're based on a personnel management system that Congress approved last year for the Department of Homeland Security. And they're also based on some 20 years' experience with a number of successful congressionally mandated pilot programs and experimental programs in the Department of Defense that have involved something in excess of 30,000 employees over the years. So the proposals that were put forward are not new; they've been tested. They're bold, to be sure, but the -- I think Charlie Abell is here, who is an expert on all of this, along with David Chu who, as was mentioned, ran these programs at Rand before he came in to run them for the Department of Defense. I'm told that the employee satisfaction tests, surveys, that have been done on these pilot programs that have existed over these past several decades, in fact have demonstrated that they have been very fully received, favorably received by the employees that have participated in them.
So, Paul Volcker, we thank you for your leadership. We thank you for bringing this challenge to the attention of the American people. And we look forward to hearing what you have to say.
MR. VOLCKER: Thank you, Mr. Secretary, and others here. This is quite an occasion. It is you, sir, who are bringing us, I think, more forcibly to the attention of the American public than we've been able to do from our particular vantage point.
I think both in Paul Light's comments and Secretary Rumsfeld's comments you have had a description of the frustrations that we've been coping with in the Civil Service reform effort for some time. It was -- what? -- 12 years ago, or so, I guess in this first Commission on the Public Service, where we had a rather elaborate commission, did a lot of research, had the support of Don Rumsfeld and many of his colleagues that are now in government, were then in government. What impact we had was, I think it's fair to say, limited, although one of the things we did encourage were these experimental efforts in the Department of Defense, which have by and large, I think, proved successful.
We have had a decline in interest in serving in government. Paul Light described the frustrations of the current situation, where people have an interest in what they call public service, broadly defined, but that's not easily translated into an interest in going to work in the federal government, for a variety of reasons.
The most interesting statistic to me in this report that we issued in this recent effort at reform, a New Commission on the Public Service, was the fact that we have a personnel system that was designed for quite a different government. In 1950, more than 60 percent of the federal civilian workforce was in the bottom five Civil Service grades, essentially administrative help, support people. Fifteen percent were in the top grades. Now this year, last year, whenever this statistic came, those statistics have almost been reversed; something like 15 percent in the clerical level, and 56 percent, I think, in the top three or four levels of the government, a completely different, professionalized, managerial service as compared to the clerical service of 50 years ago.
But has the Civil Service rules, regulations changed? Not very much. So this is the barrier we're trying to get through.
This new commission that we had had a relatively short existence, deliberately. We kept the numbers small. It was a very bipartisan group. But we quickly came to the conclusion that a fairly revolutionary approach would be appropriate. That was the professional consensus. At the same time, the president recognized very dramatically the problem with homeland security after September 11th, and now we've had a follow-up with the Defense Department, the biggest single employer, proposing arrangements that provide the degree of flexibility, I think, that really is required in the current day and age.
After all the frustrations of trying to achieve some reform, I think now some combination of forces, we have an opportunity the likes of which have not existed for many decades to make a real and constructive change in the way the Civil Service is managed in the United States. And the secretary -- I can't tell you any more eloquently than he did the importance of this from his particular perspective in a department that obviously has enormous responsibilities in terms of the national security interest and the nation interest generally of this country, the kind of challenge -- in fact, the kind of excitement that there should be through the civilian service in that department, but also are we meeting the challenges before the government.
So you have the first experiment, so to speak, the grand experiment, it's beyond experiment, in homeland security. We've got legislation for the Defense Department, which I hope and believe will have a good chance of passing through the Congress, achieving a delicate balance between the needed flexibility and the needed accountability and oversight that's important. And I hope that those two initiatives are accompanied by a broader framework, making it easier to reorganize government more generally in its personnel practices right through the administration. And we have legislation, at least in the House side of the Congress now, proposed legislation that would accomplish that purpose.
So I find myself, I guess in my encroaching old age, more optimistic about the chances for reform than I had been when I was younger and eager. But I think the need is clear, the intellectual professional consensus is pretty clear. We've got our leadership now in the administration, certainly in the Defense Department and elsewhere, that admits to all the time and troubles and responsibilities Secretary Rumsfeld has. He comes here this morning to talk about good old dull Civil Service reform. And I think that just reflects the real importance of this subject to the United States now.
So I will just leave it at that and be glad to participate in any further discussion that we're having. Are you -- are you master of ceremonies here, Paul?
MR. LIGHT: I am. Yeah. There's a lavalier mike on -- there on your side.
We have some time for some questions here for the secretary, Paul Volcker and myself.
Q For the secretary, Secretary Rumsfeld, could you explain to me -- there seems to be parallel tracks going on. We have the third way, the president's agenda, competitive sourcing, which tends to downsize your department. At the same time you're saying that personnel policy revision would recruit more people. Do you see -- is there a traffic jam coming up on those two tracks?
SEC. RUMSFELD: Is the mike working? It doesn't sound like it to me, but --
MR. LIGHT: It is, yeah.
SEC. RUMSFELD: It is. I guess it's got to be. Maybe I'll hold it.
You're right. In a department that size there are a number of things that are taking place at once that there's no doubt in my mind but that the reforms that the president and the department have put forward with respect to the Department of Defense would have the effect of having fewer military people and fewer contractors doing things that they need not do, which means that there would be more opportunities in the career Civil Service system in the Department of Defense.
Q Does that have to do with personnel reform?
SEC. RUMSFELD: Exactly. I mean, if you think about it, 320,000 military people doing essentially jobs that are not things that they signed up to do when they put on the uniform.
MR. LIGHT: You've also got in DOD roughly two million -- we estimate the contract workforce at DOD is about two million service contractors alone. And that doesn't include the contractors who are manufacturing things, that's just people who are actually delivering services -- computer programming and so forth. Eighty percent of computer programming information technology in the federal government now is done by contractors. And one of the debates about strategic sourcing, as it's called, is who should be doing this work, and on what basis. And you put all of the jobs in a basket, you start to say which ones go where? Should they be military, should they be a contractor, should it be a full-time, long-serving career officer, what should it be? And this gives you the opportunity to do that kind of sorting.
SEC. RUMSFELD: At the present time, managers really don't feel they have that choice, which is why they reach for military people for non-military tasks, because they can manage that segment. They reach for contractors.
MR. VOLCKER: You shouldn't be forced to go outside because you can't get the right people inside for things that should be done inside. (Laughs.)
MR. LIGHT: Yes, sir?
Q Paul, I think you said your survey shows that many young people see government service -- one of the benefits of government service is job security -- maybe not the benefits, but certainly one of the outstanding issues.
Mr. Secretary, would job security be done away with, do you see job security, perhaps, under the current rules as too much protection for slop or ineptitude? Or do you think, perhaps, that should be done away with?
SEC. RUMSFELD: No, the proposals we've put forward don't do that. Indeed, I'd like to comment on some of the things that have been said about the proposals that are inaccurate. I watched some of the debate that's taken place in the country on this subject, and people have alleged that this would set aside civil rights legislation. That's just flat untrue. I was in Congress during the '60s and I voted for the civil rights legislation, and there's nothing in any proposal we've made that would do that. There's allegations that it would set aside veteran's preference; that it would permit the hiring -- that it would permit nepotism. And those things are just flat not true. There are people saying things about these proposals that are inaccurate, and it seems to me it's important to read them and to look at them, and those basic safeguards are preserved in every instance.
Charlie, is that correct?
MR. ABELL: Yes, sir.
MR. LIGHT: Steve?
Q Mr. Secretary, I'd like to return to something Paul Light said. As you know, the board investigating the last -- this latest NASA shuttle disaster, apparently is looking into the relationship of the agency's management with contractors, and sort of a worry that perhaps they were too reliant on contractors. At the Defense Department, how do you feel about the role of contractors? Do you think the department's too -- is relying too much on contractors? And how do you put that in balance with what you want to see from your civil service employees?
SEC. RUMSFELD: My personal view is that there is a role for the uniform military; there's a role for career civil service and there's a role for outside private contractors, and that managers need to be held accountable -- when they're asked to perform a task, they need to be held accountable for the performance of that task, and that they need choices. And to the extent they're denied choices among those different categories, then it's very difficult to hold them accountable for their performance of their jobs.
One example might be that I looked the other day, and the number of changes in the personnel, for example, managing major Defense programs over the life of a program -- say a life of a program is 11 years in terms of its -- the inception to the delivery; it's too long, but let's say it's 11 years. In private business, you might have one or two people see something like that through, and you'd have continuity. In the Department of Defense, the numbers are anywhere from seven to 11 people. People are in these jobs for such short periods, because often they're military, sometimes they're contractor and they're changed, whereas there clearly would be opportunities, it seems to me, for -- to provide a greater degree of continuity on some of the programs if we -- if the managers had full range of choices.
MR. LIGHT: It would be nice to strengthen the presidential appointments process so talented public servants like Charlie Abell don't have to wait forever to get in. That's part of the problem at the top of the government.
One of the things we find in our discussions with managers is that they often turn to a contractor because it's the quick option and they can move quickly on it.
I think that's a terrible reason to contract out; it's just a terrible reason.
At any rate, other questions?
Q In the recently issued A-76 revision, isn't the strategic sourcing decision been made that the procedures in that circular are going to govern all employment decisions and out-sourcing decisions for commercial employees, those that aren't inherently governmental positions?
SEC. RUMSFELD: Charlie, do you want to answer that?
CHARLIE ABELL (assistant secretary of Defense for Force Management Policy): Sure. I'm not the A-76 expert in the department, but I understood those things to be guidance to us and talk about a revision to the process, as opposed to a road map to a decision. I think the decision still remains within the department, with the managers as to when they go through that process to get to should this be an out-source job or an in-house job. But that's how I understood that.
MR. LIGHT: The first version of the proposed revision was pretty broad in terms of giving agencies authority to declare a competition over before it began, basically, on a -- sort of a wing and a prayer. The new revision is tighter and does not, I think, foreshadow a particular decision one way or the other. The notion is that competition has a salutary effect on both parties. It moves away from the arbitrary targets that OMB has been using to demand competition, and I think that's a good thing. And the new deputy director of OMB for Management designate, Clay Johnson, basically said that he's moving away from arbitrary targets, which is another terrible reason to out-source.
Q Mr. Secretary, one of the interesting statistics you rattled off was that DOD was negotiating with 1,300 union locals to get rights to garnish the wages of civilian DOD employees who misuse purchase and travel cards. Is that true? And what recourse does the DOD have, given all the horror stories we've heard over the last two years of civilian abuse?
SEC. RUMSFELD: You asked me if that's true, and all I can tell you is I did not go out and count each one of the 1,300. (Laughter.) Nor can I absolutely guarantee that there are still 30 left; one might have signed last night. But Charlie Abell tells me it's true. And it is a problem, when one thinks of the amount of manpower and effort that goes into negotiating with 1,300 separate unions on a thing like that, and the amount of time it takes, and the amount of loss to the taxpayer during the period that we've wasted -- how long has it been, two years?
MR. ABELL: Two years.
SEC. RUMSFELD: And it's still not completed. But two years during which that capability on our part, which any manager would normally have that's paying a salary to somebody, to not have that capability is, I think, just not acceptable.
Q Well, generally speaking, could I ask you two gentlemen, do you feel that somehow union representation or protection for government workers should be, in fact, dispensed with -- I mean, for lack of a better way of putting it.
SEC. RUMSFELD: I don't.
MR. VOLCKER: I --
Q (Off mike.)
MR. VOLCKER: Well -- (laughs; laughter). No, we think there is room for discussion with unions, for bargaining in some areas, and this depends, and should be handled flexibly.
But the rigidity with which current civil service rules control some of these matters is just ineffective, in terms of the efficiency of government, and demoralizing, frankly, to many of the employees that feel frustrated because inefficient members of the workforce cannot be appropriately disciplined. It may be a very small percentage, but nonetheless, the amount of time that it takes to do this discourages managers from doing anything about it. And that is one kind of comment we got from all the experts that have looked at this. There has to be some better balance in being able to manage the workforce while protecting the workforce against arbitrary actions, and working with unions is obviously part of that.
MR. LIGHT: One of the things that get missed in this reform conversation is that the current system is really a managers' system. It protects managers from any sort of accountability for the actions of their units and workforce. It's the managers who absorb the resources and create the paperwork.
And what we hear from the frontline workers is that they're the ones who feel underresourced. They don't get the staffing that they need to do their jobs. There are enormous delays in getting the jobs filled, side by side. They're the ones who pay the extra price from the delays. It's the front line that suffers.
This current civil service system really enshrines managerial arrogance, to a certain degree, by protecting managers against any real accountability for what their workforce does. I think that reform is really a pro-union -- this one has a lot of debate around the union issue, but generally speaking, getting resources down to the bottom of government is absolutely a help to the frontline employee.
We'll take two more questions here.
MR. VOLCKER: Let me --
MR. LIGHT: Yeah.
MR. VOLCKER: -- if I just might make a quick comment -- it's not directly related to unions, but where the federal government really falls short in personnel policy -- one of the many areas is in training and education. It just is nowhere near what the typical private employer does in training programs and opportunities for their own employees. And I think this Department of Defense proposal would provide much more scope and incentive to provide the kind of training which in fact the military, I think, gets, but the civilian employees don't.
MR. LIGHT: Back here, all the way to the left. One more question. Okay.
Q Mr. Secretary, the adoption of the new concept of the capability-based approach requires a very flexible response to the emerging need of national security affairs, especially in light of procurement.
But while, on the other hand, the government budget is still operating, with the exception of the annual base budget, how do you put this new concept of the capability-based approach into operational context, so that you can balance between flexibility in the national security needs and this rigidity still remains in the governmental budget system?
(Note: Microphone problems develop here.)
SEC. RUMSFELD: Your question is right on the mark. The -- is this not working -- (inaudible)?
STAFF: (Off mike.)
SEC. RUMSFELD: Must be the -- (inaudible).
(Microphone problems end.)
The question is an important one, and you're exactly correct. What we've tried to do is to adjust our defense strategy so that it is a capabilities-based strategy, rather than a threat-based strategy. And we are able to do that with a reasonable amount of skill with respect to the military forces, the armed forces, the uniformed military personnel.
It is much more difficult to do it with respect to the procurement system. And it is much more difficult to do it with respect to the civilian employees because it does require and call upon us to be able to demonstrate a much greater degree of flexibility and agility.
And to the extent you're not able to move as rapidly, whether it's -- we're dealing with terrorists that can move information but with an e-mail, they can move money with a card and a bank transfer, and they can move themselves with jet aircraft; and yet this process we have, we're not able to move one person to another spot without enormous difficulty. And the things that are inhibiting us from being able to fully adapt our strategy to a capabilities-based approach certainly are central with respect to the civil service reform issue.
MR. LIGHT: Back here, and then we'll go to the blue.
Q Mr. Secretary, Mr. Volcker spoke about the efficiency of the private sector versus the government sector. Do you see a way down the line where a portion of the work that is being done by the 700,000 civilian employees is actually ceded to the private sector, is somewhat privatized to make it more efficient?
SEC. RUMSFELD: No, I don't. Let me go back up here. I don't. I tried to mention earlier what I think. What I think is very simple. I think that managers are charged with responsibility. Those managers ought to be held accountable for their performance. They have -- ought to have choices as to how they do things so that they can select the particular approach that makes the most sense for the task at hand. In some instances, that means you need a uniformed military person. In some instances, it means you're much better off using a contractor because it's a relatively short-term activity or you need the flexibility that that provides. In a number of instances, it means that you want to have permanent, career, civilian, civil service people performing those tasks.
And I don't think that anyone is smart enough to prejudge what it will do over the long run, giving managers this kind of authority and responsibility, other than being able to say with reasonable certainty that it will then enable us to hold them accountable, which you can't today, as Paul Light mentioned.
SEC. RUMSFELD: Gesundheit.
Q Oh, excuse me. (Laughter.)
SEC. RUMSFELD: Second, it will enable the taxpayers' dollars to be spent more efficiently. And third, it will enable the Department of Defense to perform its tasks in a manner that is appropriate to the seriousness of the responsibilities of this department.
What it will net out over time in terms of pluses or minuses in the three categories I've described -- career civil service, uniformed military and contractors -- I can't look out beyond five or 10 years, but there's no doubt in my mind but that it would lead to an increase in the number of civil service employees in the short term just by virtue of the numbers I've cited.
If you've got 320,000 military people performing civilian tasks that could be performed by civilians, and if we know for a fact that managers are reaching out to contractors to ask them to do things that could just as easily or better be done by career civil servants, then one has to assume that the net result of these approaches would, over the period immediately ahead, result in a net plus for the career civil service, in my view.
MR. LIGHT: Let's take one last question here. Why don't you just stay up at the podium?
Q This is open to the panel. I was wondering, as a young volunteer myself, not in the military, but we all know the military is -- has seductive benefits, I would say, to get an education. And Mr. Volcker was talking about getting an educated civil service -- or, people to work for the government. I was wondering, is there any plans in the network being proposed to have similar benefits for people who volunteer domestically in -- like, AmericaCorps members, as far as getting them the education that they need and benefits, similar to, like, a GI bill?
MR. VOLCKER: Well, I haven't thought of benefits quite in those terms. You have a big problem with paying for people deeply indebted when they go into government where there is some effort to deal with that problem. The education that I was thinking of is education that's relevant for their work in the government, so that they can do a better job and more easily get promoted and do a better job when they are promoted. I think the government has been woefully derelict, in many departments, anyway, in that area. There simply hasn't been the emphasis on developing the manpower that exists and developing the people who come into government, often with some eagerness, but they don't find themselves equipped with all the tools that they're going to need, and there ought to be opportunities to go back to school and programs of that sort, related -- (chuckling) -- in my terms, to their job opportunities, rather than a more vague educational thing for any purpose.
MR. LIGHT: The federal government currently has authority to provide loan forgiveness and recruitment bonuses, but there's no money. And on this kind of reform that we're talking about today, it's going to be utterly useless to do any kind of reform, no matter how good its design -- and I think Charlie and Ginger and David Chu have done a terrific job on this proposal.
I think Congress has some ideas for improving it. And I'm more of an Article 1 person than an Article 2. But if the resources don't eventually flow down to the bottom of the agencies in terms of dollars for training, dollars for recruitment, dollars to create a more porous workforce where people can choose to spend five years in the federal government and then go to a non-profit, or go private and move back and forth -- because that's what the workforce today wants. It wants this ability to cross sectoral boundaries several times, multiple times in career, like the gentlemen here at this podium.
So if we don't see the resources flow to the bottom, this will have been a mistake. But I'll tell you something. Right now this is the something that is better than the current system by far. The current system is just a disaster in responding to the kinds of needs that we've talked about today.
It's a good place to end. I appreciate Paul and the secretary coming, Strobe Talbott. We are adjourned. Thank you.
NOTE: ALSO PARTICIPATING WERE PAUL LIGHT, DIRECTOR, CENTER FOR PUBLIC SERVICE, BROOKINGS INSTITUTION; STROBE TALBOTT, PRESIDENT, BROOKINGS INSTITUTION; AND PAUL VOLCKER, NATIONAL COMMISSION ON PUBLIC SERVICE