Federal News Service - Transcript (Continued)

SEC. RUMSFELD: Madame Chairman, if I could just proceed, we find that it's currently taking us about five months to hire a new federal worker. And it takes 18 months to fire a federal worker. Pay raises are based on longevity, not on performance, in large measure.

Over the past several months we've worked with the Congress and tried to fashion language that would give us the needed flexibility. The—a portion of that proposal we made was approved by the House, as you mentioned.

These proposals did not come out midair. These are based on personnel management systems that Congress approved last year for Homeland Security and many years of experience with a number of successfully congressionally authorized programs, including the China Lake program, which went back two decades. So a lot of the things that we're talking about here have been tested and proven out.

The pilot programs, which now involve over 30,000 DOD employees, tested many of those reforms, including pay banding systems, simplified job classifications, pay for performance, recruiting and staffing reforms, scholastic achievement appointments, and enhanced training and development opportunities. In each of those demonstration programs, when measured, employee satisfaction has been high, and the employers are retaining more of their top performers.

Our objective is not to take those successful—is to take those successful, congressionally approved pilot programs and expand them throughout DOD, so that more civil service employees can benefit from the increased opportunities that they've created, and so that their greater effectiveness can be applied across the department.

Let me also say I've watched this debate, and I know that there are—is resistance to this change. And Senator Sununu mentioned how tough change is, and it is hard. But there's been a good deal of misinformation circulating about these proposals, and let me put a couple of the myths to rest.

Here's what the national security personnel system we're proposing will not do, contrary to what you may have read or heard. It will not remove whistle-blowing protections. Those who report management—mismanagement, fraud, other abuses will have the same protections that they have today.

It will not eliminate or alter access of DOD employees to the Equal Opportunity complaint process.

Nothing in this proposal affects the rights of DOD employees under our country's civil rights laws. I was in Congress in the '60s. I voted for all the civil rights legislation. And I can tell you that is a red herring.

Notwithstanding the allegations to the contrary, these proposals will not remove prohibitions on nepotism or political favoritism, as has been charged. Those things will properly continue to be prohibited.

It will not eliminate veterans preference. That also is a false charge.

It will not end collective bargaining, as has been suggested. To the contrary, the right of Defense employees to bargain collectively would be continued.

What it would do is bring collective bargaining to the national level, so that the department could negotiate with national unions, instead of dealing with more than 1,300 different union locals, a process that is inefficient. It simply is grossly inefficient.

It will not give the department a blank check to change the civil service system unilaterally. Like the system Congress approved for the Department of Homeland Security, before any changes are made to the civil service system, the employees' unions must be consulted, the Office of Personnel Management is involved in design, and any disagreements would have to be reported to Congress.

What it would do would be to give the president a national security waiver that would allow him to give DOD flexibility to respond in the event of a national security requires (sic) us to respond and act quickly. Congress has regularly approved such national security waivers in various laws involving defense and foreign policy matters, recognizing the need of the commander in chief to deal with unforeseen threats and circumstances.

The national security personnel system will not result in the loss of job opportunities for Civil Service employees. That is a charge that's been made. To the contrary. It's the current system that limits opportunities for DOD civilians. By creating perverse incentives for managers to give civilian tasks to the military personnel and to give civilian tasks to contractors, we believe that the transforming initiatives we are proposing would most likely generate more opportunities for DOD civilians, not less.

I can assure you, I do not want 300,000 or 320,000 men and women in uniform doing jobs that are not the responsibilities of uniformed personnel. We don't. We want them doing military tasks. And that's why they joined the military in the first place. Members of the committee, we need a performance-based promotion system for our civilian work force. We need a system that rewards excellence, similar to the one Congress insisted on for the men and women in uniform.

Congress has granted the Department of Defense the flexibility to manage the nation's largest work force: the uniformed military personnel. It works. The results are there for all to see. They are disciplined, they are well trained, they are highly effective, they are successful. And, I would add, they're also a model of equal opportunity employment. We're simply asking that Congress extend the kinds of flexibilities we need to give us in managing the men and women in uniform also to manage the civilians.

As Paul Volcker put it yesterday when he supported our approach, he said, We have an opportunity to make real and constructive change in the way the Civil Service is managed in the United States. If the Department of Defense is to stay prepared for security challenges in the 21st century, we have to transform not just our defense strategies, not just our military capabilities, but we have to also transform the way we conduct our business.

One thing we know from the recent conflicts in Afghanistan and Iraq. The enemy is watching us, and they're going to school on us. They're studying how they were—we were successfully attacked, they are studying how we responded and how we might be vulnerable again. And in doing so, they're developing new ways to harm our people, new ways that they can attack to kill innocent men, women and children. And as was mentioned earlier, they are not burdened or struggling with massive bureaucratic red tape fashioned in the last century. What this means is that we need to work together to ensure that the department has the flexibility to keep up with these new emerging threats. The lives of the men and women in uniform and, indeed, the American people depend on it. I hope that you will help us try to bring this department into the 21st century. And I thank you, Madame Chairman, for the opportunity to testify on this important national security issue.

SEN. COLLINS: Thank you.

Chairman (sic) Myers.

GEN. MYERS: Thank you, Madame Chairman and members of the committee. I've just got a short statement here. And I thank you for the opportunity to be able to be before you today and to reiterate Secretary Rumsfeld's and Admiral Clark's requests for your support of this important initiative.

First, let me begin by focusing on our soldiers, sailors, airmen, Marines, Coast Guardsmen and DOD civilians. As Senator Stevens said, our success in Operation Iraqi Freedom and the war on terrorism in general are really a testament to their dedication and their professionalism.

And I thank all of you for supporting all our efforts.

With regard to transformation, we've got to transform if we're going to continue to be successful in the 21st century. We must continue our emphasis on more agile forces, on improved command and control systems, on more precise combat power, on better integrated joint team from the planning through execution.

But our vital civilian workforce must also be part of this transformation. My calculations show that of our active duty workforce, the folks that show up every day excluding the Reserve component, about 36 percent of that workforce are civilians. So they've got to transform as well. We've got to transform that system so they're more agile and responsive in terms of hiring; in terms of the task management, the ability to assign different tasks and, of course, in rewarding performance.

As you heard from Vern Clark, and I think we all—and the secretary—you know, taking care of our people, whether in uniform or not, is a responsibility we take very, very seriously. And we're obviously dedicated to the best practices that benefit the workforce as well as the Department of Defense. Clearly, fair, ethical treatment of employees, employee safeguards, are essential to all that and are part of these proposals.

As Vern Clark told you, the Joint Chiefs of Staff have been working this issue with Secretary Rumsfeld and his staff now for many, many months. And all services are just as concerned as the United States Navy, represented by Admiral Clark here is. And, frankly, we need your help. As Vern said, we need your help to be able to do our job.

As the secretary said, we don't know what the next crisis or contingency is really going to look like. It will probably not look like the operation we just saw in Iraq. And so what we need is your support so we can be responsive to whatever challenge we face here in this 21st century. And we thank you for your support and your continued support.

Thank you.

SEN. COLLINS: Thank you, General Myers.

Dr. Chu, do you have a statement?

MR. CHU: No, ma'am, I have nothing to add.

SEN. COLLINS: Thank you.

SEC. RUMSFELD: He has the answers to all the questions, Madam Chairman! (Laughs; laughter.)

SEN. COLLINS: Well, Mr. Secretary, many of us will direct them to you, but you do have the right to be able to ask others to answer.

We now will turn to six-minute rounds of questioning.

Mr. Secretary, as you're well aware, just last year the Congress granted to the Department of Homeland Security unprecedented authority to develop a modern, flexible personnel system for its 170,000 employees. Now, many people have argued that it would make more sense to wait until that major undertaking were complete to learn from DHS's experience before undertaking another wholesale revamping of the personnel system for hundreds of thousands of additional federal workers. What is your response to that concern?

SEC. RUMSFELD: Well, I'd make a couple of comments. My understanding is that the kinds of flexibilities we're requesting, some are very similar to the Department of Homeland Security, others are things that have been granted to other departments and agencies previously. Indeed, there are a number of agencies that have a number of the flexibilities that we're requesting.

I would also say that a number of the things that we're proposing date back as long as 20 years to the China Lake effort. In other words, Congress authorized the experiments and the pilot programs. We've done them, we've tested them. It's not as though these things are new in many respects.

I would also say that there is always a fair argument about changing anything that, "Let's wait." And my problem with it is that we have enormous challenges in the world, and that we could look at the outcomes—and we know the outcomes are wrong; the outcomes are unhappy outcomes. The fact that we've got 300,000-plus military people doing civilian jobs did not just happen. It happened because people looked at what they needed done, and they went right to the military or they went right to contractors. And they stayed away from the civilian service. And they did it because they're rationals. It's because they were being held accountable for performing important national security responsibilities, and they made a judgment. They voted with their feet. They said, "I'm going to do that." And I think that the evidence is so overwhelming that the changes need to be made that my feeling is that while it would be nice to test any conceivable change, and I don't disagree with that and I see the logic to it, I think that we're well past that point in our circumstance.

SEN. COLLINS: Mr. Secretary, one of the major differences between our approaches concerns the appeals process for employees. Now, I agree with you that the current system is too slow, it's too complicated and it's too inflexible. But in designing a new system, we need to ensure that it's not only fair, but that it's perceived as fair by federal employees. That means that there has to be adequate due process and there has to be an independent decisionmaker, in my view.

The department has proposed doing away with the role of the Merit Systems Protection Board altogether, and instead, coming up with an appeals process that would be internal to DOD. If the department essentially sets up an appeals process whereby department employees will be judging the action of the department's own supervisors, my concern is will you be able to assure employees that the decisions that are rendered are fair and impartial? If there's no appeal of adverse decisions to an outside independent entity, other than going to federal court, with all the problems that entails, how will your employees be assured of a truly independent and unbiased review and decision?

SEC. RUMSFELD: I'd like to ask David Chu, Dr. Chu, to answer that question. (Laughter.) And it's because I'm plucky, but I'm not stupid. And I know this is a very complicated area, and I agree completely with you that it is important that the—any process be seen as fair if you're going to be able to attract and retain the people you need. You have to have that element of perceived fairness. And my reading of the process that Dr. Chu has proposed here, and we're proposing, is that it would have that perception of fairness.

Do you want to comment on it, David?

SEN. COLLINS: Dr. Chu?

MR. CHU: I'd be delighted to. First, let me emphasize that our proposal envisages working with the Merit System Protection Board in designing an alternative appeals process under the construct that we have advanced.

Second, I want to emphasize that we're not the only critic of the appeal process. There's a very good GAO report—testimony from 1996 to the Congress on this issue, and it says, I quote: "Its protracted processes and requirements"—referring to the appeals process—"divert managers from more productive activities and inhibits some of them from taking legitimate actions in response to performance or conduct problems," end quote.

And that is, indeed, our experience. We have a nice list of—unfortunately, I should emphasize, a list of cases where employees, at least in our judgment, misbehaved very substantially. I mean sexual harassment. I mean trying to run over your supervisor with your own vehicle. The department's sanction, as would be in the military, was to fire the individual. The appeal to the external review party—in this case the Merit System Protection Board—led to substantial downgrading to only suspension. And I think you have too much divergence in the current system between the immediacy of the facts that we confront and the remoteness of the appeal authority.

The use of an internal appeal process—we would have an appeal process if Congress were to grant us the authority we're seeking in this statute. But it would be internal Department of Defense. I think there's ample precedent to demonstrate the department can handle that in a responsible fashion. That's true of military crimes already: the Court of Military Appeals inside the Department of Defense. It's true of contract disputes with the Board of Contract Appeals. So I think there's plenty of history, evidence, structure, analogy within the department that would allow an internal process to be more expeditious and, I think, more fair, ultimately, to all the employees who do perform well, who do exemplify high standards of behavior. They don't want, in my judgment—and I think certainly evidence supports this—they don't want the rotten apples in their midst, either. And they resent it when the outcome is a slap on the wrist for what everyone sees as a horrendous offense.

SEN. COLLINS: My time has expired, but let me just make one quick point. One of the key differences between our two proposals is you would eliminate the role of the Merit System Protection Board altogether other than having a consulting role as you're setting up your new internal appeals process. We would change the role of the Merit System Protection Board by changing it to an appellate body. It would no longer do a de novo review of the case. So you would—you would solve a lot of the timeliness problems, a lot of the cumbersome, complicated process. But you would still have the ability for an employee to appeal an adverse decision outside of the department. And I think that's an important protection.

Senator Levin.

SEN. CARL LEVIN (D-MI): Thank you, Madame Chairman.

Mr. Secretary, you've stated that the department currently has 300,000 positions occupied by military personnel that could be performed by civilians. Has the department made a formal study to lead you to that conclusion? Where does that number come from?

SEC. RUMSFELD: From Dr. Chu. (Laughter.)

MR. CHU: It—it comes—it comes, actually, originally --

SEN. LEVIN (?): (Inaudible.)

MR. CHU: Sorry. It comes originally from the task force on defense reform that the previous administration constituted. We maintain a series of inventories of government—of our positions against this issue of what's inherently governmental, what can be considered commercial activity, et cetera. So there's—there's a --

SEN. LEVIN: Can you—can you give us that inventory? Would you share that with the committee?

MR. CHU: We'd be delighted to provide you with it. Yes.

SEN. LEVIN: And that inventory told us 320,000?

MR. CHU: Our—our conclusion is there's as many as 320,000 military positions that could conceivably be performed by civil personnel, yes, sir.

SEN. LEVIN: But my question, though, was that does the inventory that you refer to total 320,000?

MR. CHU: There are several inventories, to be precise about it.

SEN. LEVIN: Does any inventory total 320,000?

MR. CHU: The short answer is yes, sir.

SEN. LEVIN: Thank you. One of the most important rules that precludes the—and if you'll get us all the inventories, I'd appreciate it. One of the most important rules that precludes the Department of Defense from hiring civilian employees to perform non—to perform new functions, excuse me, is the limit on the number of civilian employees, the so-called full-time equivalent, or FTE, ceiling that is imposed by OMB.

And I'm wondering whether the administration has any plan to eliminate that FTE ceiling, Mr. Secretary?

MR. CHU: If I may, sir, we have—I have—this is one of the many red herrings the secretary has referred to. I have signed more than one memorandum within the department emphasizing, as Congress has directed, we are not to manage by FTEs, we manage by money, as far as civilians are concerned.

So, I don't want to be naive about this. There is a large culture out there that in terms of convenience in management still thinks about itself in terms of FTEs, but we are trying to get the department off this outdated concept.

SEN. LEVIN: Is there an FTE ceiling imposed by OMB?

MR. CHU: Not that I'm aware of.

SEN. LEVIN: Next, Mr. Secretary, you've referred to the high percentage of civilians in the Iraq theater who are contractors. Many of these civilians are performing short-term, surge-type functions --

SEC. RUMSFELD: That's true.

SEN. LEVIN: -- such as responding to oil-well problems, rebuilding bridges, port facilities and the like.

Are you suggesting that we should hire—the Department of Defense should hire civilian employees on a short-term basis to perform functions like those?

SEC. RUMSFELD: No, I'm really not. You're quite right, the numbers of civilians in the theater are involved in a full spectrum of activities, some of which are, undoubtedly, not appropriate for permanent employees. On the other hand, the 83 percent to 17 percent seemed to me like a disproportionately large number.

SEN. LEVIN: Well, it might be useful if you --

SEC. RUMSFELD: What it ought to be, I don't know, and no one would know. You'd have to go down and try to look at all those functions and disaggregate it, but --

SEN. LEVIN: Well, you might give us an estimate and disaggregate it, because when you use that testimony that 83 percent of the civilians deployed in the theater are contractors, you're suggesting that a significant percentage of those civilians should be Department of Defense civilian employees instead. And it would be interesting if you could have somebody just give us an estimate as to what part of the 83 percent you believe, if the rules were different, would be Department of Defense civilian employees. For the record, if you could supply that.

SEC. RUMSFELD: I'll try. I'll try.

SEN. LEVIN: Well—well, you've given the testimony --

SEC. RUMSFELD: Right.

SEN. LEVIN: -- and it seems to me you ought to back it up with some kind of an estimate.

SEC. RUMSFELD: We'll try to take the total and see if we can't come up to some number that might logically fit. I would, for example, cite things like linguists might be people that would be internal as opposed to external, as opposed to someone --

SEN. LEVIN: Tried to hire --

SEC. RUMSFELD: -- as opposed to someone putting out an oil-well fire, that would be much more likely, obviously, to be a contractor. And I understand.

SEN. LEVIN: Well, that would be helpful. And to give us the groups, the types of employment and about how many are in each group.

Dr. Chu, you've testified the department needs authority to bargain with unions at the national level because it's impractical. And the secretary also testified to this effect to continue bargaining with 1,400 (sic) separate bargaining units. And I think that, more accurately, was the secretary's testimony.

The legislative proposal would specifically authorize bargaining at a national level. And it seems to me that's one issue, that's one important point that you're making. But you're going way beyond that because you're also authorizing, or would seek to authorize the total waiver of Chapter 71 of Title 5, and that's the part of the U.S. Code that addresses bargaining rights in general.

Now, does the department intend to modify provisions, if you were given this authority, regarding unfair labor practices and the duty to bargain in good faith, for instance? Is that your intention, if we gave you the authority you seek to waive Chapter 71 of Title 5?

MR. CHU: We don't intend to engage in unfair practices, no, sir. We do seek --

SEN. LEVIN: No, no. No, no.

MR. CHU: Sorry.

SEN. LEVIN: That's not my question.

MR. CHU: I'm sorry, sir.

SEN. LEVIN: My question is, do you intend to modify the provisions of Chapter 71 of Title 5 relative to unfair labor practices?

MR. CHU: We don't have such an intent, sir. I should emphasize, this is a power, the waiver of Chapter 71, already granted Homeland Security.

SEN. LEVIN: Now, my question is this: Why isn't the authority to bargain at the national level sufficient, just that authority, given your argument about having to deal with 1,400 (sic) separate bargaining units? Why wouldn't the authority to bargain at a national level be sufficient? Why do you need the authority to waive the requirements of Chapter 71 in their entirety, given your immediate statement that you have no intent to exercise that waiver?

MR. CHU: Because you have to get the bargaining to come to a conclusion, sir. Our experience is many bargaining efforts don't come to conclusion. I'd cite an Air Force installation which is still bargaining, since 1990 over the issue of --

SEN. LEVIN: That's the authority to bargain at a national level.

MR. CHU: The bargaining process needs to have a conclusion to it.

SEN. LEVIN: We all agree on that. But is the waiver of those other—those other protections in Chapter 71 necessary to get bargaining to a conclusion?

MR. CHU: We think so, sir. I would point out that the spirit of that is in the provisions that apply to a large list of other agencies—the General Accounting Office, the FBI, the CIA, the National Security Agency, TVA, the Federal Labor Relations Authority itself. So this is not an unprecedented proposal.

SEN. LEVIN: That's not my question. (Laughter.) But thanks anyway.

SEN. COLLINS: Thank you, Senator Levin.

Dr. Chu, before I call on Senator Voinovich, I would point out, following up on Senator Levin's point, that we put within the bill a deadline for how long disputes can be before the FLRA. And we put a 180-day limit so that issues would come to conclusion; they would not hang on for years and years, as an occasional cases do now. So I think there are other ways to ensure that bargaining comes to a conclusion than having the authority to waive the entire chapter governing collective bargaining.

Senator Voinovich?

SEN. VOINOVICH: Yeah. First, I'd like to make a comment before I ask a question, and that is, number one, that I think everyone should understand that your proposal, Mr. Secretary, I know didn't happen overnight, because I know Dr. Chu and I talked about flexibility for the Department of Defense over a year and a half ago when we were up at Harvard at one of our executive sessions. So I think that's important.

It was also mentioned that it takes five months to hire someone, Admiral. And I had hearings and I brought in some college students in Dayton as to why—where they were interested in going to work for the federal government. And I'll never forget that the military person that was there said to one of the young men, "We want to hire you. You're just what we need. We have this work-study program." And the kid's face was just a big smile. And I asked the military personnel person, "How long will it take for him to find out whether he's hired?" Six months.

Now, that really doesn't have to do, I don't think, with this legislation.

I think that deals with streamlining the process in terms of hiring that could be done. I don't—I'm not sure you need legislation in order to take care of a five-month delay. It seems to me that that could be handled by—through, you know—through just better, efficient systems.

My—my question, Mr. Secretary, is that the proposed national security system would waive significant portions of Title 5. My staff has attended several briefings over the past few months in which the department has offered its rationale for these flexibilities. In some cases, it seems that DOD has requested waivers, as mentioned by Senator Levin and our chairman, that are significantly broader than necessary to make the desired reforms to its personnel system.

For example, the NSPS would include consultation with OPM. However, it would allow the secretary to break a tie when there is a disagreement between DOD and OPM. The bill that Senator Levin and the chairman have introduced would retain OPM's oversight role as an equal partner instead of granting the secretary, quote, "sole and exclusive authority to make personnel decisions". And that's an end of quote. And Title 5 was exempted for the Transportation Security Agency. And I must tell you, it's been a disaster in the personnel area. In fact, there's probably going to be here in the next day or so a disclosure that some of the people that were hired were on the FBI's not-hired (sic) list. And so I'm concerned about just, you know, kind of putting OPM aside in terms of their traditional role that they have played with other—with federal agencies.

The other one deals with Senator Levin's comments, and that is the issue of—you want the ability to collective bargain on a national level. And that seems to make a great deal of sense. But at the same time you want this extraordinary new power, you opt out of Chapter 71. And our bill would provide that you would remain in Chapter 71 as explained by our chairman.

So I'd like you to explain some more about the department's thinking about these proposed waivers. Why—why zap you out completely from OPM and change the relationship between the Defense Department and OPM as it has not been changed in many of the other areas in the federal government? And second of all, if you get this broad authority to bargain collectively—and that's a big deal—why not preserve the rights under Chapter 71?

SEC. RUMSFELD: Go ahead.

MR. CHU: Sir, to this issue of the OPM role, I think we in the legislation we tabled and that was further, I think, on this point strengthened by the House mark, proposed that the regulations would be jointly developed. What we did add, as you indicate, sir, is a national security waiver, as the secretary testified, that would say if it's a national security issue, the secretary reaches the conclusion that it's not going to work for this department, he may take a different course than might be true from other cabinet departments. It is subject to the president's ultimate decision, in the way the House has worded that—worded that language.

Second—so we look forward to partnership with OPM. In fact, we have used OPM's excellent studies over the last several years as our guide to how we should be designing the structure of this—of this system.

In terms of Chapter 71, well, I would reiterate, sir, that is the step the Congress already took with the Homeland Security Department. That statute does waive Chapter 71.

We are merely being more explicit, I think, than that statute is, as to what we intend to do with that authority. That is to say, we would like on broad, cross-cutting human-resource issues to move to national bargaining, as opposed to local bargaining. It's too slow, too cumbersome, doesn't get to a consistent result for the department in a timely fashion.

Let me come back, if I may, just a minute to the OPM role. The Congress has already given this department, in certain targeted areas, authority outside of strict joint development. The laboratory community is an example of that authority. The Senate's recent decision in the armed services bill on expanding the acquisition workforce demonstration project has some of the same flavor to it. We think there will be a partnership with OPM under these kinds of broader authorities. But we do think it's important—and I think the Congress has agreed over the years with that principle—to preserve the notion that there is often a difference when national security is involved, and that difference needs to be respected.

SEN. VOINOVICH: Well, what it really boils down to, though, is that you're zapping out an enormous number of people from OPM, and I'll wake up one day -- (chuckling) -- and God only knows what we'll have all over the federal system. And I think that there needs to be some consistency across the board.

And it seems that if there's a difference of opinion, that—then I think we ought to—that somebody ought to be having—looking at—also looking at the big picture, particularly if you're given all of the other provisions that you're asking for, and the flexibilities, in your proposed legislation.

SEC. RUMSFELD: Senator, if you think about it, the Department of Defense is in 91 countries in various ways. We're in every time zone. We have working conditions, often, that are harsh and dangerous. We have a circumstance that is, I think, notably different than other departments and agencies. And yet for the most part, what Dr. Chu has been testifying to is a reflection of in—for the most part, authorities and flexibilities that, possibly not in toto, but in part, have been given to a variety of other departments and agencies for some time; a set of flexibilities which have been tested in the Department of Defense at—under authorizations by Congress, for many, many years.

And I think that it is—you're right; it does involve a lot of people, because the Department of Defense is a big department. But it also goes to the kinds of things that Admiral Clark and General Myers are talking about: that we do have a responsibility for national security and that they have having trouble managing to meet those responsibilities in a way that is appropriate and that the Congress, with its oversight responsibilities, would want to know that they could do, so that they could hold people accountable for their performance.

SEN. VOINOVICH: Well, it seems to—Madame Chairman? It seems to me, though, that in this wide variety of—there's categories of employees—that you might restrict it to those categories of employees of the kind of the people that you're talking to, and not the vast number of people that are working in the department in a lot of jobs—for example, in the state of Ohio at DFAS and some of the other facilities that we have—and maybe distinguish between them.

SEC. RUMSFELD: One of the --

SEN. VOINOVICH: It's the same thing with the issue of performance evaluation, pay for pay (sic). I've been through this.

SEC. RUMSFELD: Right. We know.

SEN. VOINOVICH: This is tough stuff.

SEC. RUMSFELD: It is.

SEN. VOINOVICH: And if you don't have the people that have got the training and the skill to get the job done, it can be a big disaster. And it seems to me, if you're going to get started on something, that you would cascade it, that maybe you'd say, "Look, we're going to do so many or designate certain areas where we're going to move in and do that," but not just in one fell swoop go forward and start the system.

SEC. RUMSFELD: Let me make two comments. One is, we kind of have done what you're suggesting, over a period of time, by these pilot programs, which have involved tens of thousands of people.

And second, one of the complaints I hear from managers is that they have to manage to a variety of different personnel systems.

Is this something you want to comment on?

MR. CHU: Yes, sir.

We have units where there are fewer than a hundred employees under a single overall supervisor which operate under as many as five or so different personnel systems. And at that level, it's a nightmare for the supervisor. You have employees who are working side by side who are governed by different rules as to what—how you can reward them, how you discipline them, how you counsel them, what you must do to advance their careers. We need a cohesive system for the department as a whole, very much, I think, as General Myers and Admiral Clark have testified. This is all part of the same --

SEN. VOINOVICH: I don't think we have a problem with that. There's—we have—we have no problem with that. We didn't have any—it's the same thing we're trying to do in the Homeland Security Department is to try and have a system that's understandable across the board. So we have no problem with that. There's just some of these things in terms of—it's the issue of how far do you go and how fast do you go in an enormous undertaking that you're making? And we're trying to be helpful, not—not harmful, to what you're trying to accomplish.

SEN. COLLINS: Thank you.

Senator Akaka.

SEN. DANIEL K. AKAKA (D-HI): Thank you very much, Madame Chairman.

Secretary Rumsfeld, you are seeking to waive Chapter 53 of Title 5, which governs the federal wage system that pays federal blue collar employees. DOD employs over half of the government blue collar workers. And nearly half of those employees are veterans. As DOD moves through a pay-for-performance system from the GS-based system, which includes guaranteed annual pay increases, my question is, what happens to the cap, what happens to the cap on blue collar pay?

MR. CHU: We are seeking, sir—you are accurately summarizing our preferences. We are seeking to bring essentially the entire department under a pay banding system. That's why we are seeking to waive those parts of Chapter 33 that would otherwise restrain the inclusion of blue collar employees in such a system. We do, of course, set blue collar wages based upon wage surveys. And that would continue to be the practice that we would use in the future. I think we have precedent here in how we handle our non-appropriated fund employees. I don't think there—I don't think there should be a big issue here.

SEN. AKAKA: I—let me ask another part of that. If you decide to retain the federal wage system for the department blue collar workers, will you abide by the Monroney amendment, which Congress specifically required the department to follow in 2001? And the Monroney amendment requires that when the government had a dominant industry in a particular area, the private sector wage data had to come from the same industry. So my question is, would you abide by that amendment?

MR. CHU: We will abide by whatever law the Congress enacts. Yes, sir.

SEN. AKAKA: The department wants to waive Chapter 77 of Title 5 relating to employee appeals. Such a waiver would eliminate employee access to the Merit System Protection Board. What are the specific problems DOD has encountered with the MSPB?

MR. CHU: Let me, if I may, use my prop, sir. I think you can see the problem with MSPB by the thickness of the manual that guides—this is the purple volume I'm holding in my hand—that guides MSPB decision-making. And that is not a set of histories of unusual cases. This is the principles MSPB is supposed to follow.

I think the—there are two central problems with the current process. One is, it takes far too long to come to resolution. Second, in too many cases, in too many cases where there has been, at least in our judgment, serious employee misconduct—and I don't mean just minor spats and differences; this is sexual discrimination. This is a supervisor who backed a woman into a closet and made what we thought were improper advances. The MSPB decision was, in the words of the administrative law judge, that they were simply romantic expressions by the supervisor in our effort to have the employee terminated or, in fact, reduced to a suspension.

And so I think there's a failure, frankly, to deal with the realities in the same way that we need in a cohesive force to deal with people who misbehave, the same cohesive force to which Admiral Clark spoke. It undercuts discipline in the system as a whole. It leads, in my judgment, to severe morale problems for the other employees of the agency, who see the bad apples, see us try to take action on these people and fail. Worse, it leads supervisors to give up, to feel, just as Senator Coleman indicated, that "It ain't going to make any difference, why should I bother to try?" And that leads ultimately to what Admiral Clark and General Myers cannot stand, and that is a denigrated level of performance.

ADM. CLARK: May I give an example, Senator? In January 2003, we had an employee, a GS middle-grade employee who had been under performance review and observation for a number of months, and the employee was terminated. It went—the removal notice cited the unsatisfactory performance. The Merit System Protection Board judge discounted this performance assessment in the judgment. And the judge made the decision that because in a period of time the employee had been injured, that the observations and the documented performance that was required by law and that had been done for months and months, discounted it, and then went on to cite the age of the individual and the years of service, which are specifically not to be considered in performance cases.

Now, this is January. This is what happens. And so then what happens to—just as Dr. Chu said, here the supervisor has now worked months with an employee who we've been having difficulty with, you spend months in the process, and the judgment is made—and you know, at the end of the day, I commented when I was with Secretary Rumsfeld over here on the Hill talking about this subject, and I made this comment: This is not about us standing up and asking for some system that doesn't hold us accountable. The United States military, at the heart of everything that we believe in is accountability. If we don't do something right, hold us accountable; but give us a chance to manage this workforce in a way that then allows us to maintain the morale of the workforce, you know, the vast majority of this workforce that are heroes, that are helping us produce the military capability that will then give the president of the United States of America options when we have to go on and prosecute this global war on terrorism.

SEN. AKAKA: Thank you for that response. Could you get back to us on—could you get back to us on what MSPB case law or regulations impacts DOD the most?

Can you provide that --

ADM. CLARK: Absolutely. Be happy to.

SEN. AKAKA: Madame Chairman, my time is expired. But I would like to make this statement that there are those who would say that the MSPB process takes too long. However, nearly 80 percent of cases at the MSPB are resolved within 90 days. This is better than the EEOC or the NLRB. According to the Senior Executives Association, there is no known government judicial or administrative operation that issues initial decisions faster than the MSPB.

So, Madame Chairman, I ask unanimous consent to include in the record a letter from the Senior Executives Association in support of MSPB appeal rights.

SEN. COLLINS: Without objection. And Senator Akaka, you brought up a very good point, and I want to clarify for our panel once again that the bipartisan bill that we've introduced specifically allows DOD to disregard the Merit Systems Protection Board case law that you've cited today as troubling. And I would encourage you again to take a look at the provisions in our bill, because I think they specifically deal with the issue that you have raised.

Senator Fitzgerald?

SEN. PETER FITZGERALD (R-IL): Thank you, Madame Chairman.

Dr. Chu, I was very interested in your testimony about the process you've had to go through to get the right to garnish—or, maybe it was Secretary Rumsfeld who mentioned trying to garnish wages of DOD employees who had actually, in effect, stolen money by using their credit card, perhaps for a personal use or some other impermissible use. And Dr. Chu, you said you had to negotiate separately with how many different locals --

MR. CHU: We have—if you include the nonappropriated fund locals, we have nearly 1,366 locals in the Department of Defense.

SEN. FITZGERALD: Thirteen-hundred?

MR. CHU: Thirteen-hundred and sixty-six.

SEN. FITZGERALD: Thirteen-hundred and sixty-six, and you've been undertaking that for how long?

MR. CHU: The travel card negotiations to which the secretary was referring has been going on for the better part of two years. It may even have started in the last administration; I'd have to check.

SEN. FITZGERALD: And probably during that time—I seem to recall several congressional hearings where DOD was called before and beat up about the misuse of credit cards. But it—in fact, your ability to get at that problem, perhaps, stems from the laws that are on the books. So, you're getting beat up by us on one hand, and on the other hand, we're hampering your efforts to solve that problem.

You're probably, incidentally, the only employer in the country that wouldn't have the right to offset money that the employee owed. I think employers have a common law right of offset in a case like that.

Now, Senator Levin was asking questions that indicated that he, perhaps, doesn't have any objection to DOD having the right to bargain nationally on national issues. And I understand Senator Collins' bill, you would allow national bargaining except if there's a case of a specific local.

And, in fact, if there's more than one local involved, then they could bargain nationally.

But Senator Levin was raising objections to your request to waive Chapter 71 of the Labor-Management Relations Act. And I looked at—I had my staff get me a copy of this. And I noted that right at the outset—and it looks like it was passed in 1978. Does that sound right? During the—that'd be during the Carter administration. They start out by exempting the GAO, the FBI, the Central Intelligence Agency, the National Security Agency. And then, as you pointed out, the TVA—the Federal Labor Relations Authority itself is exempted from this—the Federal Service Impasses Panel, and the Central Imagery Office are all exempted. It seems like everybody who has a national security function is exempted from this except the DOD. Aren't you really just trying to get the flexibility that other agencies that are involved in protecting this country have?

MR. CHU: Absolutely, sir.

SEN. FITZGERALD: And to me it seems appropriate that they have that flexibility. I think the one indisputably legitimate function, the most important function of our federal government is provide for the common defense. And I'd like to see them have that authority.

I know this isn't the subject per se of the legislation you are proposing, but I notice that Secretary Rumsfeld wrote an op-ed in the Washington Post a week or so ago that referenced 800 reports that the DOD has to submit annually to Congress. And that number caught my attention, because I don't recall ever reading one of those. I don't know --

SEC. RUMSFELD: (Laughs.)

SEN. FITZGERALD: -- if those reports are sent to my mail room. I don't—I'm not even aware if any of my staff members are reading those. I imagine those requirements go back a long way in the law. How many people do you have to put -- ?

SEC. RUMSFELD: Oh! Think of how many trees we have to kill to make the paper.

SEN. FITZGERALD: Enormous.

SEC. RUMSFELD: Yeah. I mean, it is—and what happens is frequently there'll be a—just for the sake of argument, the—let's assume that the Pentagon does something wrong 20 years ago, "wrong" meaning people in Congress didn't agree with it. An amendment's proposed. And the Pentagon resists the amendment, saying that that's too burdensome. And they say, All right, submit a report every year and tell us—assure us that you're not doing something that we feel you shouldn't have been doing. It's a perfectly legitimate beginning of this process. And then what happens is it goes on and on and on. And it goes for 10, 15 years. And there's no sunshine—no sunset rule, I should say, on it. And we're—our hope is that people will take a look at these things and say, Fair enough, let's discontinue, you know, half or three-quarters of these reports.

I noticed—you read off a list of agencies that do not have a requirement for third party intervention. I notice that I'm here also where the Botanical Gardens, the Office of Architect of the Capitol, a whole bunch of agencies are exempted from this. It goes on—Administrative Office of the U.S. Court—it just—it's a list of—I don't know how long it is.

SEN. FITZGERALD: Not to—not to mention our own Senate offices.

MR. CHU: (Laughs.) We won't know that. (Laughter.)

SEN. FITZGERALD: (Laughs.) Well, I certainly—I'd like to help you address the huge number of reports that you have to file. Some of these could go way back, they could go back to the Korean War, the Vietnam War, something that happened at that time that should have been addressed, but the circumstances have long since changed, perhaps, to obviate the need for that report. And I see no reason not to put it in whatever bill this committee works out, even though it's on a slightly different issue. I mean, we've got to start the ball rolling to give you the flexibility to meet your needs.

And I congratulate you on undertaking this task, Secretary Rumsfeld. We're lucky to have someone of your caliber who's willing to put up with the kind of nonsense you have to put up with --

SEC. RUMSFELD: (Laughs.)

SEN. FITZGERALD: -- in Washington to manage a department of your size. It's—it's a great challenge, and we thank you for doing what you're doing and contributing your services here. Thank you.

SEC. RUMSFELD: Thank you very much.

SEN. COLLINS: I want to thank our panel for being with us this morning. Your presence here is testimony to how important this issue is to the department. And we appreciate your testimony and your insights. We will be working further in the hope of coming up with a bipartisan plan that we will either move as a separate bill or take up in the DOD conference, which Senator Levin, Senator Akaka and several of us fortunately serve on both committees. So thank you very much for your testimony this morning.

MR. CHU: Thank you, ma'am.

SEC. RUMSFELD: Thank you very much, Madame Chairman.

SEN. COLLINS: I should note Senator Pryor is also a member of both committees, too. Thank you.

SEC. RUMSFELD: Thank you.