October 27, 2008
By Shawn Zeller, CQ Staff
With economic upheavals dominating recent news cycles, it was easy to miss the quiet abandonment of the Bush administration’s ambitious campaign to revolutionize federal workforce rules. For the past six years, the White House has been battling federal unions and revising agency directives in order to phase out the seniority-based civil service pay and promotion schedule and replace it with a merit-based system stressing individual job performance.
The goal was to implement the merit program in the Department of Homeland Security (DHS), then fan out to the government’s main employer, the Department of Defense, by far the largest Cabinet department with 680,000 civil servants, and ultimately to the rest of the executive branch.
But earlier this month, Thomas D. Cairns, the chief human capital officer for the 174,000-employee DHS, announced that the agency would “rescind application of its new human resources system” as of Oct. 2. And in late September, the Pentagon said that it was drastically scaling back implementation of its new system. Now only 205,000 non-union workers in the Pentagon will be evaluated under those provisions, leaving most of the remaining 475,000 civil servants in the pre-existing General Schedule for federal pay and promotion.
The moves are a significant setback for President Bush’s efforts to overhaul a civil service job system that has survived fundamentally intact since its last major upgrade under President Jimmy Carter, in 1978. The White House, heeding longtime critics of federal workforce protocols, sought to scrap the General Schedule’s 15 pay grades and 10 steps — interim levels of compensation between successive pay grades — and replace them with a pay-for-performance system more akin to those found in the private sector.
But critics say that the White House overplayed its hand by using work rule overhauls to challenge government collective-bargaining agreements, and a new Democratic majority in Congress, eager to show its clout in union-friendly causes, has started pushing back.
“It’s no blinding insight to say that the civil service reforms, particularly those at DHS and Defense, have not gone as far, nor have they been implemented as broadly, as was anticipated,” said John Palguta, who formerly oversaw policy and evaluation at the federal agency tasked with studying the new measures, the Merit Systems Protection Board. The Case for Change
Union leaders say that the damage to the White House plan was largely self- inflicted. The administration “was given a blank check and they overwrote it,” said Mark Roth, general counsel for the American Federation of Government Employees, the largest federal employee union.
When the White House began pushing for the new merit system in 2002, it had ample political capital to back its check. White House officials argued that traditional approaches to federal pay and performance were ill-suited to the nature of the post-Sept. 11 terrorist threat, which demanded a more mobile and nimble workforce. Lead managers at the Pentagon made much the same argument — particularly since the Defense Department was already under pressure from Secretary Donald H. Rumsfeld to get leaner and quicker in facing “emerging threats” from terrorist groups.
And once the White House got Congress to sign off on its plans, they also contained provisions permitting Homeland Security and Pentagon managers to rewrite rules governing labor relations and workplace discipline.
Bush summed up the case for the new employment system in a 2002 pep talk to employees slated to join Homeland Security. “The new department must be able to get the right people in the right place at the right time with the right pay,” the president said.
The sense of urgency attending the war on terrorism was just one factor in the rapid deployment of the new rules. During President Bill Clinton’s tenure, a bipartisan consensus began to take hold on the need to fundamentally revise federal workplace protocols. The liberal-leaning Brookings Institution issued an endorsement of merit-based pay systems via its National Commission on the Public Service (which included several senior Clinton White House veterans), echoing from many longtime civil service critics that the General Schedule promoted lackluster performance by effectively rewarding mediocrity and punishing initiative. “Quality of performance, which ought to be the central factor in determining compensation, is too often ignored,” it concluded in its January 2003 report.
In short order, the Homeland Security and Defense departments hewed to the recommendations. Both agencies rolled out plans to retire the General Schedule’s rigid seniority-based pay grades and instituted broad pay ranges that gave managers much greater latitude to place high-performing workers on the fast track to raises and promotions. A Bargain Too Far
The problem, White House critics say, is that once the administration had so many players on the same page, it tried to launch a broader assault on the unionized federal workplace. Early in 2005, the administration promulgated new plans to have the Homeland Security and Defense departments overrule collective-bargaining agreements on national security grounds. Neither the Brookings commission nor Congress had endorsed such initiatives — and unions and sympathetic members of Congress quickly began to push back.
In 2005, a coalition of unions led by the American Federation of Government Employees and the National Treasury Employees Union sued to stop the collective-bargaining changes. In 2006, a federal appeals court in Washington ruled in their favor in the Homeland Security case, on the grounds that the administration action went beyond the authority Congress granted in 2002. The decision came on top of a similar victory in a federal district court challenge to the Pentagon’s suspension of collective-bargaining rules.
The Defense Department eventually prevailed on an appeal, but that victory, handed down in August 2007, soon became academic. Democrats, who had recently taken control of the House and Senate, quickly set about trimming back Bush’s workplace initiatives. In its fiscal 2008 defense authorization law, for example, Congress restored collective-bargaining rights and the right to appeal disciplinary actions to workers in the Defense Department. It also exempted 150,000 unionized blue-collar Pentagon workers from the new merit system.
That was a body blow to Bush’s plan. “It’s not appropriate for me to say whether Congress made a good or bad decision,” said Brad Bunn, the program executive for the Pentagon’s new personnel system. “The department worked with the Hill to preserve as much of the National Security Personnel System as possible, while recognizing the reality of the environment,” he said, referring to widespread skepticism among Democratic lawmakers over the changes.
Bunn believes he has salvaged enough of the system for it to stand as the first major civil service overhaul in a generation. “What we said back in the early days... is that this represents the largest change to civil service rules in 25 years, and I still think that holds true.”
Even so, the impact of the new merit system is far more circumscribed than the White House had hoped. It will still affect non-union white-collar workers at Defense. But the administration, which deftly employed a favorable political climate to get the rules in place, now plainly concedes that the new political scene is undercutting its aims. That was the brutal message delivered in the continuing spending resolution that Bush signed into law last month: It defunds implementation of Homeland Security’s personnel system.
The move leaves many advocates of civil service overhauls stymied about how best to go forward. One lesson of the debacle, Palguta said, is that trust among Congress, the White House and the federal workforce broke down at a crucial point. “Even if one assumes that all of the reforms were well-intended, I don’t think all the parties bought into that. ...Some thought they were punitive or driven by goals other than effective workforce management.”
Union leaders contend that the White House exploited a climate of fear to get harmful and unnecessary workplace measures into place. They also charge that the departments’ successes in keeping the United States safe and mounting two large-scale military invasions point up the fallacy in the administration’s argument that both departments suffered from significant management problems.
DHS officials, meanwhile, are unsure how their workplace rules will be refashioned. Spokesman Larry Orluskie said it plans to move ahead with a new system it has devised for evaluating employee performance, even though those evaluations won’t translate as directly into pay-rate decisions. As for the flexibility to shift workers across offices and agency lines that the department wanted, as well as its plan to scrap the old disciplinary appeal process, Orluskie said, “We’re going to have to figure out another way to do that.”
Palguta — who now serves as vice president of the Partnership for Public Service, a Washington advocacy group for civil service overhauls — thinks that a new administration could bring new opportunities, even though both major party candidates are largely unknown quantities on the issue.
“I don’t think the need for civil service reform has gone away,” he said. “We still have to deal with the pay issue and the clunky hiring system because right now the government is just not competing as well as it should” with the private sector. The key to success, Palguta added, will be “building that level of trust and involving people who are affected in trying to design new approaches.”