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STATEMENT BY
THE HONORABLE DAVID S. C. CHU
UNDER SECRETARY OF DEFENSE FOR
PERSONNEL AND READINESS

BEFORE THE
COMMITTEE ON ARMED SERVICES
UNITED STATES HOUSE OF REPRESENTATIVES

CONCERNING
THE PROPOSAL FOR A NATIONAL SECURITY PERSONNEL SYSTEM IN THE DEPARTMENT OF DEFENSE

MAY 1, 2003

   

Mr. Chairman and members of this distinguished Committee.  Thank you for the opportunity to be here today, and for your unwavering support of the men and women who serve in our Armed Forces.    

We are currently engaged in a historic deployment of American forces.  This makes the present time the appropriate time to make defense personnel and systems agile and responsive.  

On March 13^th, I provided my personnel overview to members of the House Armed Services Subcommittee on Total Force.  At that time, my testimony was conceptual in nature, as the transformation bill hadn't yet been delivered to the Congress.  Today, however, I am prepared to address specifics of those provisions that are necessary to achieve the goals of personnel transformation and to assure national security.

Modernizing and Streamlining Officer Management

The Secretary of Defense has underscored the need for greater flexibility in managing job tenure and career length for general and flag officers with a view toward longer time in a job and longer careers.  Moving senior officials through career paths, as private sector organizations do, provides experiences that develop leadership and management skills.  Present laws frequently operate against those objectives.

The transformation bill also contains several provisions that streamline joint officer management.  These include providing the Secretary of Defense with the authority and discretion to define the standards for joint tour lengths and to recognize situations in which officers should receive full joint credit; to increase greater flexibility in assigning officers following graduation from joint education institutions; and to modify length of joint duty assignments to restore equity and reduce waivers. 

Creating a Continuum of Service

It is essential that the Reserve components be part of this transformation.  This has certainly been evident in Operation Iraqi Freedom, and was the conclusion of the recently completed QDR-directed study, "A Review of Reserve Component Contributions to National Defense."    The study underscored a need to facilitate a "seamless flow" throughout a military career that may span both active and reserve services; that is, a career that spans a "continuum of service." 

Operating within a continuum of service paradigm necessitates simplifying the rules for employing Reserve Component members, enhancing combined Active Component/Reserve Component career development, and creating conditions for the seamless flow of personnel from active to reserve and reserve to active over the course of a military career.  Barriers to such service must be minimized, thereby eliminating the need for the workaround solutions often in effect today.  A more flexible reserve compensation and benefit system can serve to encourage volunteerism.   

Creating a National Security Personnel System

 It was my privilege to discuss this subject earlier this week with the House Governmental Reform Subcommittee on Civil Service and Agency Operations, chaired by your colleague, Rep. Jo Ann Davis.  We had a vigorous discussion.  I would like to take this opportunity to provide some brief background and to address a number of issues that were raised at that hearing. 

I could tell you what a National Security Personnel System might look like.  But I think the words of labor and management officials at the Army's Research Development and Engineering Center (RDEC) at Redstone Arsenal will speak more clearly.  Last summer, the RDEC civilian personnel management demonstration project, begun in 1997, came up for a five-year renewal.  Jim Brothers, president of the American Federation of Government Employees Local 1858 said: "By far, the majority of the employees have indicated to me, both privately and in called meetings at RDEC, that they wanted it renewed.  I'm talking about 98 percent of them did.  Only 1 out of 50 opposed it."

Key features of the demonstration project include pay banding, a pay for performance management system, training for degrees, advanced in hire pay setting, sabbaticals, a voluntary emeritus program, extraordinary performance pay, local intern accelerated pay setting and a distinguished scholastic achievement appointment authority.  These are the kinds of flexibilities that we seek to expand across the department in our proposal for a National Security Personnel System. These are also the kind of flexibilities that a majority of American Federation of Government Employees Local 1904 voted last month to be involved with at the civilian personnel demonstration project at the Army's Fort Monmouth installation in New Jersey.  

Some of the most persistent questions at the hearing earlier this week focused on the urgency of our proposal.  I was asked, why do we need NSPS now?  Shouldn't we wait to see how the Homeland Department handles its new flexibilities?  Shouldn't DoD wait for governmentwide flexibilities to be proposed?  The basic answer is that our national security responsibilities do not allow us to wait for others to act.  Some are looking for a "burning platform" argument to determine if support for this proposal is justified.  May I say, that we should not wait for disaster to strike.  There are plenty of reports, studies, and commentaries over the last decade to support the case that the civil service system of today is broken.  And it is time to heed them. 

We have a different way of doing business than other agencies - we fight wars as a total force.  No other agency has that particular arrangement and no other agency-wide civilian workforce or civilian personnel system exists in that context, that is, where the primary function of the civilian workforce is to support the military in accomplishing the mission: to protect and defend the United States from foreign aggression and international terrorism.  We have one, very urgent job in defense today: to transform the way we fight and the way we manage.  That is what the Administration's proposal "The Defense Transformation for the 21^st Century Act" is about.  I should note that the National Security Personnel System is the first pillar in that proposed legislation. 

The tremendous achievement of our armed forces, that the Secretary is now recognizing in Iraq, was the result of new thinking about fighting.   Some have cited our achievements in Iraq as evidence that nothing in broken in the civil service component of the Department's total force.  Nothing could be further from the truth.  The fact that our civilians and the system that supports them were and remain able to function in spite of the constraints of the present civil service system is a testament to their immense dedication and willingness to take whatever extraordinary efforts were (and are) necessary to support our national security objectives and achieve the mission.  It would be fundamentally wrong to use that dedication to attempt to justify taking no action to fix a broken system.

We seek new thinking and the same kind of transformation in the management of our civilians as we are pursuing in the rest of the total force.  We have decisions to make about that civilian force.  We need to recruit a new generation of employees to replace the baby boomers.  In addition, as I have previously indicated in testimony, we have some 300,000 positions that are currently occupied by military personnel.  We need to free those personnel to do warfighting tasks.  Shall all, some, or none of those 300,000 be contracted out?  Given the inflexibility of the current civilian personnel system and the fragmentation of personnel authorities in the Department, we are faced with a very difficult choice.  

We faced the same situation with our science and technology reinvention laboratories, which needed the capability to hire and assign more flexibility.  Congress granted that authority in section 342 of the National Defense Authorization Act for Fiscal Year 1995, as amended, which presently covers some 30,000 defense employees.  These flexibilities have greatly assisted the labs and testing centers in recruiting and retaining personnel.  

The specific special authorities available to the labs (under demonstration project authority) include: the Secretary of Defense exercising the authorities of the Director of the Office of Personnel Management under demonstration project authority; near real time hiring authority; distinguished scholar hiring authority; a pay for performance system (where portions of the annual increase are put 'at risk' to pay top workers); pay banding (which enables management to increase pay without having to reclassify duties and complete jobs); and a voluntary emeritus program.  These are the same types of flexibilities that would be available to DoD under the NSPS.   The way to retain good people and prevent outsourcing is to given them a better system of management, which is what we are proposing in NSPS.

The Department would prefer to have the option of choosing whether to utilize and deploy inhouse capability that can be recruited quickly, is at hand, high performing, and agile - rather than to be limited, by necessity, to outsourcing, which may or may not be available to deliver the right capability to the right place at the right time, with the quality of service needed.  Of equal importance is the additional and critical effect of having a better-blended total force organization.  An agile military personnel system does not blend well with a rigid civilian personnel management system. 

Civil Service Protections Intact

We have heard a number of allegations that NSPS would remove critical protections from civil servants and allow all manner of politicization and favoritism.  None of that is true, for one simple reason: NSPS requires adherence to merit system principles and the explicit prohibitions against prohibited personnel practices such as nepotism, retaliation for whistleblowing, and politically based personnel decisions.  Those are the same provisions and the same protections that were legislated into the Homeland Department and they are in this bill, too. 

Transformation Readiness

The Congress has graciously granted a number of civilian personnel management flexibilities to the Department over the years.  We now have nine ongoing personnel demonstration projects.  We also have several alternative personnel systems within the Department.   These flexibilities have been used extensively and evaluated positively.  It is time to move forward in expanding them to the rest of the Department.  The Congress and the Administration, past and present, have looked to DoD for innovation (in the first buyouts) and for downsizing (the Department took the majority of cuts within the government in the 1990s).  We are ready to move forward again.

Comparison to Homeland Security Provisions

NSPS is based on the Homeland civilian personnel management model - with three differences.  We believe that the Homeland legislation should be viewed as a starting point, but certainly not the end of personnel management flexibility in the government.  In this context, we view the authority to "waive" selected portions of title 5 as an opportunity to fix recognized problems occurs.  We will not - as some have intimated - as the authority to take away employee rights and benefits, but rather as the authority to create a more cohesive system of personnel management.   

National Security

We propose a waiver for national security reasons.  The purpose of the regulatory waiver is to ensure that the role of the Secretary of Defense in advising the President on matters involving the defense capabilities and activities of this nation remains intact and unimpeded.  The bottom line is that the Department of Defense must be able to accomplish the missions given it by the President.  We can tell you that we look forward to working closely with the Director of the Office of Personnel Management and her staff in developing a National Security Personnel System.  She is our partner.

Should there be a difference of view between the Secretary and the Director on a matter essential to the national security, the legislation provides that the Secretary's authority to invoke the waiver is subject to the direction of the President of the United States.  This provides a check on the ability of the Secretary of Defense to override OPM's position.  Thus, the Department does not have the ability to determine unilaterally what it may wish to do in the area of civilian personnel management.

National Level Bargaining

We propose a statutory authority to bargain at the national level.  We need the authority for the Department to bargain at the national level on matters affecting employee working conditions (as well as to collaborate with employee unions in planning, developing, and implementing the civilian personnel system established under NSPS).  Let me be very clear.  The Department of Homeland Security has the same basic authority with respect to federal labor relations - to work with a group of employee representatives in developing and implementing its civilian personnel system, and to waive the current way of doing the labor relations business. 

The Department of Defense, given its nearly 1,400 bargaining units, would be unable to implement a new system of personnel management without the ability to bargain at the national level.  We do not propose to eliminate local bargaining units.  We propose working with labor unions at a national level.  The authority to waive chapter 71 (given to the Department of Homeland Security and included in our proposal) would have allowed us to establish national bargaining by regulation.  We propose to do so in statute to show the Department's strong commitment to labor relations and collective bargaining.  We would expect the national unions to gather the local issues and bring them to the table as we work through the establishment of the new system.

Staffing, Pay Administration, and Training Flexibility

We propose to be allowed to waive three additional areas of title 5, primarily those having to do with staffing, training, and certain pay administration and allowance provisions.  The Department cannot recruit the people it needs to replace its many retirement eligible employees, pay them properly, or train them appropriately without these flexibilities.  The Department of Defense simply cannot be competitive in the marketplace without flexibilities for hiring.  We could not implement all the new flexibilities we have in our demonstration projects without these waivers.  These waivers provide such flexibility to the Department as a whole.

The authority to revamp (or "waive") chapters 55 and 59 of title 5 would allow DoD to fix urgent pay problems.  The current law penalizes some employees on overtime.  The result is that these employees earn less in overtime than their normal take home pay.  Current law with respect to compensatory time, night pay, standby, irregular and hazardous duty differential, availability pay for criminal investigators, pay for Sunday and holiday work, premium pay, danger pay allowances are all needlessly complex and administratively burdensome.  Our goal is to create a flexible and administratively workable pay system that will not needlessly penalize employees because of its rigid statutory constraints. 

I would like to offer the Committee the opportunity to enter into the record the April 2, 2003 Federal Register notice that I brought with me today to demonstrate where we would use a majority of the flexibilities if granted the authority to extend them beyond the demonstration projects.                   

Process

Some have raised questions about the speed with which this proposal has been presented to the Congress.  Defense transformation has been a central theme and tenet of this Administration before and since taking office.  The Department has been at the forefront of civilian personnel management innovation for decades.  Last year, the Administration submitted legislation that would have provided authority for an alternative personnel system for the Department of Defense.  The intention to develop a more coherent and flexible system of personnel management as a key part of the Department's transformation efforts has been briefed in concept to Members of Congress and staff over the past several months.  In fact, the regulatory detail of the NSPS - known as our Best Practices initiative -was briefed to the staff of the civil service subcommittees in the House and Senate, majority and minority, last fall and earlier this year.  The legislation was submitted on April 10, but the concept and the specific regulatory approach that we propose to take with the National Security Personnel System have been well briefed over the last three months.

The process that really presses all of us is the incredible urgency of national security issues at home and around the world, and the uncertain battles that we may face in the future, with the need for perhaps far different capabilities.  That means we must improve today's capabilities in the near term, not the long term.  We know that the Congress fully understands the challenges that we face and we appreciate your consideration of our proposals to address those challenges.