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Performance-Based Transformation:
GAO's Experience:

The Honorable David M. Walker: 
Comptroller General of the United States:

Homeland Security:
Maximizing Leadership Conference:
Landowne, VA:
August 2, 2005:

The Case for Change:

Government is on a "burning platform," and the status quo way of doing 
business is unacceptable for a variety of reasons, including:

* Past fiscal trends and significant long-range challenges

* Rising public expectations for demonstrable results and enhanced 
responsiveness:

* Selected trends and challenges having no boundaries
* 
Additional resource demands due to recent terrorism events in the 
United States:

* Government performance/accountability and high risk challenges, 
including the lack of effective human capital strategies:

GAO's High-Risk List 2005

Addressing Challenges in Broad-based Transformations: 

High-Risk Areas: Protecting the Federal Government's Information 
Systems and the Nation's Critical Infrastructures; 
Year Designated High Risk: 1997. 

High-Risk Areas: Strategic Human Capital Management[A]; 
Year Designated High Risk: 2001. 

High-Risk Areas: U.S. Postal Service Transformation Efforts and Long-
Term Outlook[A]; 
Year Designated High Risk: 2001. 

High-Risk Areas: Managing Federal Real Property[A]; 
Year Designated High Risk: 2003. 

High-Risk Areas: Implementing and Transforming the Department of 
Homeland Security; 
Year Designated High Risk: 2003. 

High-Risk Areas: Establishing Appropriate and Effective Information-
Sharing Mechanisms to Improve Homeland Security; 
Year Designated High Risk: 2005. 

High-Risk Areas: DOD Approach to Business Transformation[A]; 
Year Designated High Risk: 2005. 

High-Risk Areas: DOD Approach to Business Transformation[A]: DOD Supply 
Chain Management (formerly Inventory Management); 
Year Designated High Risk: 1990. 

High-Risk Areas: DOD Approach to Business Transformation[A]: DOD Weapon 
Systems Acquisition; 
Year Designated High Risk: 1990. 

High-Risk Areas: DOD Approach to Business Transformation[A]: DOD 
Business Systems Modernization; 
Year Designated High Risk: 1995. 

High-Risk Areas: DOD Approach to Business Transformation[A]: DOD 
Financial Management; 
Year Designated High Risk: 1995. 

High-Risk Areas: DOD Approach to Business Transformation[A]: DOD 
Support Infrastructure Management; 
Year Designated High Risk: 1997. 

High-Risk Areas: DOD Approach to Business Transformation[A]: DOD 
Personnel Security Clearance Program; 
Year Designated High Risk: 2005. 

Managing Federal Contracting More Effectively: 

High-Risk Areas: DOE Contract Management; 
Year Designated High Risk: 1990. 

High-Risk Areas: NASA Contract Management; 
Year Designated High Risk: 1990. 

High-Risk Areas: DOD Contract Management; 
Year Designated High Risk: 1992. 

Management of Interagency Contracting; 
Year Designated High Risk: 2005. 

Assessing the Efficiency and Effectiveness of Tax Law Administration: 

High-Risk Areas: Enforcement of Tax Laws[A, B]; 
Year Designated High Risk: 1990. 

High-Risk Areas: IRS Business Systems Modernization[C]; 
Year Designated High Risk: 1995. 

Modernizing and Safeguarding Insurance and Benefit Programs: 

High-Risk Areas: Medicare Program[A]; 
Year Designated High Risk: 1990. 

High-Risk Areas: HUD Single-Family Mortgage Insurance and Rental 
Housing Assistance Programs; 
Year Designated High Risk: 1994. 

High-Risk Areas: Medicaid Program[A]; 
Year Designated High Risk: 2003. 

High-Risk Areas: Modernizing Federal Disability Programs[A]; 
Year Designated High Risk: 2003. 

High-Risk Areas: Pension Benefit Guaranty Corporation Single-Employer 
Insurance Program[A]; 
Year Designated High Risk: 2003. 

Other: 

High-Risk Areas: FAA Air Traffic Control Modernization; 
Year Designated High Risk: 1995. 

[A] Legislation is likely to be necessary, as a supplement to actions 
by the executive branch, in order to effectively address this high-risk 
area.

[B] Two high-risk areas-Collection of Unpaid Taxes and Earned Income 
Credit Noncompliance-have been consolidated to make this area.

[C] The IRS Financial Management high-risk area has been incorporated 
into this high-risk area.

[End of table]

21st Century Challenges Report:

Issued February 16, 2005:

Based on GAO's work for the Congress:

Provides background, framework, and questions to assist in reexamining 
the base:

Covers entitlements & other mandatory spending, discretionary spending, 
and tax policies and programs:

[See PDF for image]

[End of figure]

Twelve Reexamination Areas:

Mission Areas:

* Defense:

* Education & Employment:

* Financial Regulation & Housing:

* Health Care:

* Homeland Security:

* International Affairs:
* Natural Resources, Energy & Environment:
* Retirement & Disability:
* Science & Technology:
* Transportation:

Crosscutting Areas:

* Improving Governance:
* Reexamining the Tax System:

Generic Reexamination Criteria and Sample Questions:

Relevance of purpose and the federal role:

* Why did the federal government initiate this program and what was the 
government trying to accomplish?

* Have there been significant changes in the country or the world that 
relate to the reason for initiating it?

Measuring success:

* Are there outcome-based measures? If not, why?

* If there are outcome-based measures, how successful is it based on 
these measures?

Targeting benefits:

* Is it well targeted to those with the greatest needs and the least 
capacity to meet those needs?

Affordability and cost effectiveness:

* Is it using the most cost-effective or net beneficial approaches when 
compared to other tools and program designs?

Best practices:

* Is the responsible entity employing prevailing best practices to 
discharge its responsibilities and achieve its mission?

Illustrative 21st Century Questions:

How should the historical allocation of resources across services and 
programs be changed to reflect the results of a forward-looking 
comprehensive threat/risk assessment as part of DOD's capabilities- 
based approach to determining defense needs?

How can the United States better develop a world-class technical and 
scientific domestic workforce that is not as dependent on large inflows 
of international students and researchers? For example, are different 
educational tools or targeted funding strategies needed to enhance U.S. 
student achievement in math and science?

What criteria should be used to target federal funding for homeland 
security in order to maximize results and mitigate risk within 
available resource levels.

How can industry standards for acceptable care be established and 
payment reforms be designed to bring about reductions in unwarranted 
medical practice variation?

Which tax incentives need to be reconsidered because they fail to 
achieve the objectives intended by the Congress, their costs outweigh 
their benefits, they duplicate other programs, or other more cost- 
effective means exist for achieving their objectives?

Transformation:

Webster's definition:

An act, process, or instance of change in structure, appearance, or 
character:

A conversion, revolution, makeover, alteration, or renovation:

The Objective of Transformation:

To create a more positive future by maximizing value and mitigating 
risk within current and expected resource levels:

Transformation Has Different Dimensions:

DOD: DHS: U. S. Postal Service: IRS: DOE: NASA:

Information Sharing:
Human Capital:
Strategy Financial Management:
Information Technology:
Sourcing Strategy:
Disability Programs:
Real Property Management:

Note: All of the above are on GAO's High Risk List to one extent or the 
other.

Transformation: A New Model for Government Organizations:

Government organizations will need to:

* Become less hierarchical, process-oriented, stovepiped, and inwardly 
focused.

* Become more partnership-based, results-oriented, integrated, and 
externally focused.

* Achieve a better balance between results, customer, and employee 
focus.

* Work better with other governmental organizations, non-governmental 
organizations, and the private sector, both domestically and 
internationally, to achieve results.

* Focus on maximizing value, managing risk and enhancing responsiveness 
within current and expected resource levels.

Keys to Making Change Happen:

Commitment and sustained leadership:

Demonstrated need for change (i.e., burning platform):

Start at the top and with the new people (transformation takes 7+ 
years):

Process matters (e.g., employee involvement) Don't fight a two-front 
war:

15-percent rule:

Identifiable and measurable progress over time:

* Communication, communication, communication:

* Figure out what's right versus what's popular:

* Patience, persistence, perseverance to pain before you prevail:

Several other actions needed:

* Strategic Plan:

* Core values:

* Organizational alignment:

* Recruiting, development, and succession planning strategies:

* Modernizing and integrating institutional, unit and individualized 
performance measurement and reward systems:

* Employee empowerment and effective communications:

Selected GAO-Related Activities:

Speeches and Outreach Efforts

CG Forums:

High Risk Update Report:

21st Century Challenges Report:

Various Congressional Consultation and Assistance Efforts:

Public Education Assistance:

Constructive engagement efforts (e.g., best practices guides, self 
assessment tools, benchmarking statistics):

Leading by example:

GAO: Leading by Example (Change, Performance, and Human Capital 
Management):

* Mission and vision clarification * Core values: accountability, 
integrity, reliability:

* Strategic planning:

* Organizational realignment * Definitions of success:

* Multi-tasking and matrix management:

* Procurement, contracting, and acquisition:

* Human capital:

* Information technology:

* Knowledge management:

* Financial management:

* Client service/external agency relations and protocols:

* Enhanced products and services:

* Constructive engagement with agencies:

* Partnering with other accountability and "good 
government"organizations:

GAO's Strategic Plan:

[See PDF for image] - graphic text:

Serving the Congress and the Nation: GAO's Strategic Plan Framework:

Mission:

GAO exists to support the Congress in meeting its constitutional 
responsibilities and to help improve the performance and ensure the 
accountability of the federal government for the benefit of the 
American people.

Themes:

* Long-term Fiscal Imbalance; 
* National Security; 
* Global interdependence; 
* Changing Economy; 
* Demographics; 
* Science and Technology; 
* Quality of Life; 
* Governance; 

Goals and Objectives:

Provide Timely, Quality Service to the Congress and the Federal 
Government to Address Current and Emerging Challenges to the Well-Being 
and Financial Security of the American People related to:

* Health care needs and financing; 
* Education and protection of children; 
* Work opportunities and worker protection; 
* Retirement income security; 
* Effective system of justice; 
* Viable communities; 
* Natural resources use and environmental protection; 
* Physical infrastructure; 

Respond to Changing Security Threats and the Challenges of Global 
Interdependence involving:

* Emerging threats; 
* Military capabilities and readiness; 
* Advancement of U.S. interests; 
* Global market forces; 

Help Transform the Federal Government's Role and How It Does Business 
to Meet 21st Century Challenges by assessing:

* Roles in achieving federal objectives; 
* Government transformation; 
* Key management challenges and program risks; 
* Fiscal position and financing of the government; 

Maximize the Value of GAO by Being a Model Federal Agency and a World-
Class Professional Services Organization in the areas of:

* Client and customer service; 
* Strategic leadership; 
* Institutional knowledge and experience; 
* Process improvement; 
* Employer of choice; 

Core Values:

* Accountability; 
* Integrity; 
* Reliability; 

Source: GAO.

GAO Strategic Plan 2004-2009.

[End of strategic plan framework]

Selected Source Measures:

* Results:

* Clients/customers:

* People:

* Partnerships

Annual Performance Measures (1998 and 2004): 

Performance measure: Financial benefits (billions); 
FY 1998 (Actual): $19.70; 
FY 2004 (Actual)*: $44. 

Performance measure: Other benefits; 
FY 1998 (Actual): 537; 
FY 2004 (Actual)*: 1197. 

Performance measure: Past recommendations implemented; 
FY 1998 (Actual): 69%; 
FY 2004 (Actual)*: 83%. 

Performance measure: Return on investment (ROI); 
FY 1998 (Actual): 58:1; 
FY 2004 (Actual)*: 95:1. 

Performance measure: Financial benefits per employee (millions); 
FY 1998 (Actual): $6.10; 
FY 2004 (Actual)*: $13.70. 

Performance measure: Timeliness; 
FY 1998 (Actual): 93%; 
FY 2004 (Actual)*: 97%. 

*All of the FY 2004 performance measures are records, except timeliness 
which tied the record set in FY 2003.

[End of table]

Client Feedback:
Fiscal Years 2002-2005:

Year: 2002;
Percent Favorable: 92%;

Year: 2003;
Percent Favorable: 96%;

Year: 2004;
Percent Favorable: 97%;

Year: 2005 (as of 5/13);
Percent Favorable: 98%;

Response rates were 46% in FY02, 31% in FY 03, 34% in FY04, and 30% in 
FY05.

[End of Table}

GAO Benchmarking Results for 2004:

GAO exceeded the latest private sector and Office of Personnel 
Management (OPM) benchmark measures in the following four questions, as 
shown below.

Personal Experiences: I am given a real opportunity to improve my 
skills in my organization;
Benchmarking Results: Private Industry: 62%;
Benchmarking Results: OPM 2004: 63%;
Benchmarking Results: GAO 2004: 70%;

Personal Experiences: My job makes good use of my skills and abilities;
Benchmarking Results: Private Industry: 74%;
Benchmarking Results: OPM 2004: 67%;
Benchmarking Results: GAO 2004: 71%;

Personal Experiences: My work gives me a feeling of personal 
accomplishment;
Benchmarking Results: Private Industry: 75%;
Benchmarking Results: OPM 2004: 71%;
Benchmarking Results: GAO 2004: 79%;

Personal Experiences: Considering everything, how satisfied are you 
with your job?;
Benchmarking Results: Private Industry: 71%;
Benchmarking Results: OPM 2004: 68%;
Benchmarking Results: GAO 2004: 76%;

[End of Table]

Key GAO Partnerships:

[See PDF for Images]

National Audit Forum:

INTOSAI:

Others:

GAO Advisory Groups:

Professional Associations:

Good Government Organizations:

[End of Figure]

Key Transformation Elements:

People:

Process:

Partnerships:

Technology:

Environment:

The most important of the five is people--an agency's human capital.

[See PDF for Image]

[End of Figure]

Federal Human Capital Reform

People are critical to successful transformation:

However, the existing federal personnel system is outmoded and a 
barrier to transformation needed to address 21st Century challenges:

GAO placed strategic human capital management on the high risk list in 
2001 to focus attention on needed reforms:

More progress on reform has been achieved in the last 5 years than in 
the previous 20:

* Legislative reforms:

* President's Management Agenda:

* Individual agencies' efforts:

Tailored flexibilities have been granted to a number of agencies: DHS, 
DOD, NASA, GAO, etc.

GAO is sharing its knowledge and experience to help inform other 
agencies in their efforts and to avoid pitfalls:

How GAO Has Addressed Its Human Capital Challenges:

HQ realignment & field office restructuring:

Self-assessment checklist:

Human capital profile:

Workforce & succession planning:

Employee feedback survey & suggestion program:

Employee Advisory Council:

Enhanced employee communications & participation:

Skills & knowledge inventory:

Employee preference survey:

Frequent flyer miles:

Student loan repayment:

Recruitment & college relations:

Phased retirement initiative:

Training/development:

Recognition & rewards:

Business casual dress & business cards:

Enabling technologies:

Opportunity/inclusiveness:

Mentor/buddy programs:

Commuting subsidy:

Competency-based employee appraisal system:

Human Capital Officer:

Office of Opportunity & Inclusiveness:

Flexitime and telework:

Total compensation communications:

Classification and compensation review:

Human Capital Strategic:

Legislation Addressing GAO's Human Capital Challenges:


Past:

* Broad-banding system for mission staff:

* Expedited hiring authority (e.g., internship program):

* Special pay rates:

* Senior level for technical staff:

* Targeted early out and buyout authority (3 years):

* Revised RIF rules:

Recent:
* Targeted early out and buyout authority (permanent)

* Annual pay adjustment rates•Pay retention provisions:

* Relocation benefits:

* Increased annual leave for upper level employees:

* Executive exchange program:

* Re-designation of "General Accounting Office" to "Government 
Accountability Office":

GAO Elements of Reform:

Modern, Effective, Credible, and Validated Performance Management 
System:

* Focuses on core competencies:

* Helps to communicate employee performance expectations:

* Creates a "line of site" linking institutional team/unit and 
individual performance:

* Makes meaningful distinctions in employee performance:

* Provides for competency-based results automatically and relative peer 
group standing on request:

Modern Classification and Compensation System:

* Uses Pay Bands:

* Is market-based:

* Is performance-oriented:

Safeguards, transparency, and accountability built in:

* Provisions for employee participation:

* Pre-and post-implementation consultation and communications strategy 
incorporated:

* Internal pre-decisional revenues and reasonable post-decisional 
transparency:

* Avenues for adverse action appeals, both internally and externally:

Competency-Based Performance Appraisal:

Objective of new system are to provide a:

* Clear link to our strategic plan, professional standards, protocols 
and core values

* Fair, honest, accurate and non-discriminatory assessment of 
performance based on standards that are valid, properly applied, and 
transparent to employees:

* A sound basis for enhancing the performance capacity of all staff, 
rewarding high-performing staff, and dealing with "below expected" 
performers:

[See PDF for Image]

Succession Planning:

Promotions:

Recruitment:

Work Assignments:

Performance Management:

Pay Decisions:

Career Planning:

Training:

Competency Model:

* Achieving Results:

* Maintaining Client and Customer Focus:

* Developing People:

* Thinking Critically:

* Collaborating with Others:

* Presenting Information Orally:

* Presenting Information in Writing:

* Leading Others:

[End of Figure]

Analyst/Specialist Appraisal Scores (1984-2004):

Average Rating (5-point scale):

Year: 1984;
Average Rating: 3.84;
Percent of All Ratings 4.7 and above: 7%;
Percent of All Ratings = 5.0: 1%;

Year: 1985;
Average Rating: 3.90;
Percent of All Ratings 4.7 and above: 7%;	
Percent of All Ratings = 5.0: 1%;

Year: 1986;
Average Rating: 3.98;
Percent of All Ratings 4.7 and above: 9%;
Percent of All Ratings = 5.0: 1%;

Year: 1987;
Average Rating: 4.02;
Percent of All Ratings 4.7 and above: 10%;
Percent of All Ratings = 5.0: 1%;

Year: 1988;
Average Rating: 4.07;
Percent of All Ratings 4.7 and above: 11%;
Percent of All Ratings = 5.0: 2%;

Year: 1989;
Average Rating: 4.14;
Percent of All Ratings 4.7 and above: 19%;
Percent of All Ratings = 5.0: 3%;

Year: 1990;
Average Rating: 4.26;
Percent of All Ratings 4.7 and above: 19%;
Percent of All Ratings = 5.0: 3%;

Year: 1991;
Average Rating: 4.33;
Percent of All Ratings 4.7 and above: 24%;
Percent of All Ratings = 5.0: 4%;

Year: 1992;
Average Rating: 4.39;
Percent of All Ratings 4.7 and above: 31%;
Percent of All Ratings = 5.0: 6%;

Year: 1993;
Average Rating: 4.46;
Percent of All Ratings 4.7 and above: 36%;
Percent of All Ratings = 5.0: 7%;

Year: 1994;
Average Rating: 4.54;
Percent of All Ratings 4.7 and above: 41%;
Percent of All Ratings = 5.0: 10%;

Year: 1995;
Average Rating: 4.59;
Percent of All Ratings 4.7 and above: 43%;
Percent of All Ratings = 5.0: 12%;

Year: 1996;
Average Rating: 4.61;
Percent of All Ratings 4.7 and above: 50%;
Percent of All Ratings = 5.0: 16%;

Year: 1997;
Average Rating: 4.63;
Percent of All Ratings 4.7 and above: 51%;
Percent of All Ratings = 5.0: 16%;

Year: 1998;
Average Rating: 4.62;
Percent of All Ratings 4.7 and above: 50%;
Percent of All Ratings = 5.0: 18%;

Year: 1999;
Average Rating: 4.16;
Percent of All Ratings 4.7 and above: 11%;
Percent of All Ratings = 5.0: 2%;

Year: 2000;
Average Rating: 4.18;
Percent of All Ratings 4.7 and above: 12%;
Percent of All Ratings = 5.0: 2%;

Year: 2001;
Average Rating: 4.26;
Percent of All Ratings 4.7 and above: 17%;
Percent of All Ratings = 5.0: 2%;

Year: 2002;
Average Rating: 2.19;
Percent of All Ratings 4.7 and above: NA;
Percent of All Ratings = 5.0: NA;

Year: 2003;
Average Rating: 2.30;
Percent of All Ratings 4.7 and above: NA;
Percent of All Ratings = 5.0: NA;

Year: 2004;
Average Rating: 2.34;
Percent of All Ratings 4.7 and above: NA;
Percent of All Ratings = 5.0: NA;

Note: GAO’s new competency-based performance management system was 
implemented in January 2002. There were no individual appraisal 
averages as high as 4.7 in FY02, FY03, or FY04.

[End of Table]

People Measures: Staff Development (Percent of staff responding 
favorably):

Question: Internal training (delivered by GAO staff or contractors):
FY03 67%: 63%;
FY04 70%: 68%;
FY05 72%: 70%;

Question: External training/conference:
FY03 67%: 85%;
FY04 70%: 86%;
FY05 72%: 88%;

Question: On the job training I received:
FY03 67%: 69%
FY04 70%: 72%;
FY05 72%: 75%;

Question: Computer-based training delivered by Internet, IPTV, or CD:
FY03 67%: 25%;
FY04 70%: 57%;
FY05 72%: 58%;

[End of Table]

People Measures: Staff Utilization (Percent of staff responding 
favorably):

Question: My Job made good use of my skills and abilities;
FY03 71%: 71%;
FY04 72%: 72%;
FY05 75%: 75%;

Question: GAO provided me with opportunities to do challenging work;
FY03 71%: 69%;
FY04 72%: 70%;
FY05 75%: 73%;

Question: In general, I was used effectively;
FY03 71%: 73%;
FY04 72%: 74%;
FY05 75%: 78%;

[End of Table]

People Measures: Organizational Climate (Percent of Staff responding 
favorably):

Question: A spirit of cooperation and teamwork exists in my work;
FY03 71%: 73%;
FY04 74%: 78%;
FY05 76%: 79%;

Question: I am treated fairly and with respect;
FY03 71%: 74%;
FY04 74%: 77%;
FY05 76%: 80%;

Question: My morale is good;
FY03 71%: 67%;
FY04 74%: 69%;
FY05 76%: 71%;

Question: Sufficient effort is made to get the opinions and thinking of 
people;
FY03 71%: 67%;
FY04 74%: 74%;
FY05 76%: 76%;

Question: Overall I am satisfied with my job at GAO;
FY03 71%: 74%;
FY04 74%: 74%;
FY05 76%: 75%;

[End of Table]

People Measures: Leadership (percent of staff responding favorably):

Question: Gave me the opportunity to do what I do best;
FY03 78%: 79%;
FY04 79%: 79%;
FY05 80%: 81%;

Question: Treated me fairly;
FY03 78%: 86%;
FY04 79%: 87%;
FY05 80%: 89%;

Question: Acted with honesty and integrity toward me;
FY03 78%: 85%;
FY04 79%: 86%;
FY05 80%: 88%;

Question: Gave me the sense my work is valued;
FY03 78%: 75%;
FY04 79%: 77%;
FY05 80%: 78%;

Question: Ensured a clear link between my performance and recognition 
of it;
FY03 78%: 69%;
FY04 79%: 72%;
FY05 80%: 73%;

Question: Provide meaningful incentives for high performance;
FY03 78%: 57%;
FY04 79%: 58%;
FY05 80%: 59%;

Question: Implemented change effectively;
FY03 78%: 74%;
FY04 79%: 75%;
FY05 80%: 77%;

Question: Dealt effectively with EEO and discrimination issues:
FY03 78%: 92%;
FY04 79%: 92%;
FY05 80%: 92%;

Question: Demonstrated GAO's core values;
FY03 78%: 86%;
FY04 79%: 88%;
FY05 80%: 89%;

Question: Made decisions in a timely manner;
FY03 78%: 76%;
FY04 79%: 77%;
FY05 80%: 77%;

[End of table]

Classification and Compensation System: Key Guiding Principles:

* Enable GAO to attract and retain top talent:

* Result in equal pay for work of equal value over time:

* Be reflective of the roles and responsibilities that we expect GAO 
staff to perform:

* Be reasonable; competitive; performance-oriented; and based on 
skills, knowledge, and role:

* Be affordable and sustainable based on current and expected resources 
levels:

* Be in conformity with applicable statutory limits:

* Try to assure a reasonable consistency in ratings and related 
compensation results within and between teams:

Pay Philosophy: Performance-Oriented and Market-based:

Historically

* Pay ranges followed the GS schedule:

* Everyone could advance to the pay cap irrespective of their 
performance--not a matter of if, but when:

New Approach:

* Pay ranges set to be competitive with the labor markets in which GAO 
competes for talent:

* Everyone can advance to the pay cap—but they must have performance in 
excess of a certain level to advance beyond a certain point of the pay 
range (e.g., 75th percentile):

* Pay ranges may overlap in upper part of band pay range to adequately 
reward expertise, leadership, and performance:

Classification and Compensation Review (CCR) Approach--Best Practices:

Hired an experienced and top quality firm--Watson Wyatt:

Followed an industry best practices process and methodology

* Early involvement of Career Stream Focal Points (including Employee 
Advisory Council representatives) to provide:

- Knowledge and expertise on job content:

- Insight regarding attraction and retention issues including turnover, 
recruitment sources, and mid-career hiring:

- Hands-on review and confirmation of GAO job matches and 18 selected 
published survey sources:

Multiple authoritative surveys used for determining competitive 
compensation data:

Widely recognized local labor market data index used for local market 
categories:

Extensive involvement throughout the study by the Executive Committee 
to:

* Provide strategic guidance and input:

* Confirm and approve job matches from selected published survey 
sources after consideration of recommendations from Career Stream Focal 
Points and Watson:

Proposed Compensation Ranges: Analysts:

Washington DC Market-Based Compensation Ranges:

Reference Range: 1;
Expected Pay: Pay Range Minimum: $45,000;
Range: Competitive Pay: $59,000;
Above Expected: 75 percentile: $68,000;
Pay Range: Pay Range Maximum: $74,000;

Reference Range: 2a;
Expected Pay: Pay Range Minimum: $60,000;
Range: Competitive Pay: $80,000;
Above Expected: 75 percentile: $92,000;
Pay Range: Pay Range Maximum: $99,000;

Reference Range: 2b;
Expected Pay: Pay Range Minimum: $75,000;
Range: Competitive Pay: $100,000;
Above Expected: 75 percentile: $115,000;
Pay Range: Pay Range Maximum: $125,000;

Reference Range: 3;
Expected Pay: Pay Range Minimum: $86,000;
Range: Competitive Pay: %114,000;
Above Expected: 75 percentile: $131,000;
Pay Range: Pay Range Maximum: $135,500[1];

[1} The maximum pay shown for Reference Range 3 is estimated. It will 
be adjusted to its final level when OPM determines the amount of the 
2005 locality increase for Washington, DC.

[End of Table]

Other Agencies' Elements of Reform:

DHS and DOD reforms

* Intend to include many of these same elements of a flexible and 
contemporary human capital management system:

- Pay bands for more flexible classification, staffing, and 
compensation approaches:

- More market based and performance oriented pay system:

- Modern performance management systems:

* But many details still to be defined, and the agencies face multiple 
challenges:

- Revisions to labor-management relations have been controversial:

- Need to provide sustained and committed leadership, dedicated 
resources, pre-implementation training, and a post-implementation 
program evaluation strategy:

- Need to assure that the necessary support infrastructure is in place 
before allowing agencies to implement certain authorities 
(e.g.,performance-based pay):

- Need to conduct appropriate studies over time (e.g., market-based 
compensation ranges:

Going Forward:

Reforms to date recognize that one-size-fits-all approach is not 
appropriate to each agency’s demands, challenges, and missions. 
However, a reasonable degree of consistency across the government is 
still desirable (e.g., principles, values, and safeguards):

Need to move forward with reform, but how it is done, when it is done, 
and on what basis it is done can make all the difference:

Future reforms should incorporate a phased approach, where agencies are 
authorized to implement reform only after they have shown they have the 
infrastructure in place and the resources to be successful (i.e., show-
me approach):

As part of this approach, agencies must be able to make effective use 
of new authorities and have critical infrastructure in place:

* Strategic human capital planning process linked to the agency’s 
overall strategic plan:

* Modern, effective, credible, integrated, and validated performance
management system:

* Adequate internal and external safeguards (e.g., reviews, appeal 
processes):

* Adequate resources for training and evaluation:

In the short term, reforms should, at a minimum, include select and 
targeted new authorities:

* Allowing agency heads to make a limited number of term appointments 
awarded noncompetitively:

* No guaranteed pay increases for persons who do not perform at an 
acceptable level:

* Rightsizing and restructuring authorities that can place additional 
emphasis on factors such as knowledge, skills, and performance:

Broader reforms should be guided by a framework consisting of a common 
set of:

* Principles (e.g., merit principles):

* Criteria (e.g., demonstrated business case):

* Processes (e.g., preconditions, including adequate infrastructure in 
place):

GAO continues to work with key clients and stakeholders on future of 
reform:

* Forum on government-wide framework:

* Testimony on DHS and DOD human capital designs:

* Symposium on modern compensation systems:

* Sharing our experience in implementing our reforms:

* Ongoing dialogue with the Congress, OMB, OPM, and various agencies, 
professional groups, unions, and others:

The Key Ingredients Needed for These Challenging and Changing Times:

* Courage:

* Integrity:

* Innovation:

[End of slide presentation]