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U.S.
Office of Personnel Management
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Mr. Chairman and members of the Subcommittee it is an honor to be here to provide testimony on behalf of the Office of Personnel Management
As you may know, I was recently confirmed as Deputy Director of the agency and named Acting Director upon the resignation of former OPM Director Jim King. This is my first opportunity to provide testimony before a Congressional Committee and I am proud to speak of the activities of OPM's Oversight function and how diligently they are working to achieve our strategic goal of protecting and promoting a merit-based civil service... through an effective oversight and evaluation program.
However, it is not pleasant to have to discuss the findings of serious violations of merit system principles and laws as detailed in our report of a Delegated Examining Oversight Review of the National Credit Union Administration (NCUA). Findings of this magnitude are very rare, as are the measures we have taken to correct them.
Let me repeat, it is extremely rare to find that an agency has committed violations as serious as these. We often find honest errors, misinterpreted regulations, or operating procedures that must be improved to protect the merit principles.
In these cases we suggest improvements such as better quality control, training for managers and personnelists, and we provide technical assistance to assure compliance with merit principles and required personnel practices. In fact, this is just the way the process began with the NCUA.
In July, 1996, we reviewed their Delegated Examining Unit as part of our review of delegated examining authorities granted to all agencies. The major problem discovered at that time was their use of an unauthorized minimum education requirement.
We required corrective action and told them we would do a follow-up audit within a year. In April of 1997, they were notified that the follow-up review would begin on June 16. The review began as scheduled. Throughout the review the NCUA Staff cooperated fully in providing all files and records requested.
We found that the problems noted in the 1996 review had basically been corrected. However, it soon became evident that even more serious violations were taking place.
At the opening meeting of the review, the Director of Human Resources advised our team that there were situations where vacancy announcements had listed a duty station that was not, in reality, where the position was located.
She later produced a copy of a May 13, 1997, memorandum to senior NCUA managers which stated that vacancies should not be announced at one duty station with the knowledge that it would change in ninety days.
The on-sight review concluded on June 20, 1997. We identified serious violations in two areas -- the use of false duty stations and the inappropriate use of the Outstanding Scholar Appointing Authority.
Regarding the use of false duty locations -- four situations were identified in which vacancy announcements issued for false duty locations resulted in the hire of sixteen individuals. The purpose of the false duty locations was to enable selection officials to hire applicants they had inappropriately pre-selected. NCUA officials instructed applicants to apply under the false duty location announcements, selected the applicants and assigned them work in cities and states not listed in the vacancy announcement under which they applied. Permanent official personnel documents used to preserve employment and benefit entitlements were falsified. None of these sixteen employees ever worked in the location to which he or she was appointed.
As I have stated, this practice allowed for the pre-selection of candidates. I think an explanation of what we mean by pre-selection would be helpful. There are no indications that any of the individuals was pre-selected because of political affiliation or family relationships. Rather, the indications are that many of these people had been contacted at job fairs, through college recruitment efforts or recruitment efforts of NCUA employees.
The other serious violations involved inappropriate use of the Outstanding Scholar Appointing Authority. This Authority is part of a Federal Court Order known as the Luevano Consent Decree, and use of this Non-Competitive appointing authority is restricted to positions identified in the decree. Outstanding scholar authority is a hiring tool created by the court decree to address racial diversity under certain circumstances. It is not a tool designed to address gender issues.
Prior to 1994, the NCUA's major occupation was Financial Institution Examiner. Because this occupation was covered by the Luevano Consent Decree, noncompetitive outstanding scholar appointments could be made.
NCUA then determined that the Financial Institution Examiner was inappropriate for their work and in 1994 OPM approved a new occupation, Credit Union Examiner for their use. Credit Union Examiner positions are not covered by the consent decree and full competitive examining procedures must be used to fill these jobs.
After this new occupation was in place, NCUA continued to appoint individuals to the non-existent Financial Institution Examiner jobs and reassigned them to the new occupation after a few months.
It is clear that this practice was adopted to deliberately circumvent the competitive examining process required for the Credit Union Examiner jobs.
When questioned about the improper use of the Outstanding Scholar authority, NCUA managers indicated the practice was necessary to increase diversity. This claim is not credible. Between July 1995 and March 1997 NCUA made 45 hires under this authority. Only 3 hires were African American, 1 was Asian or Pacific Islander and 1 was Hispanic. Even considering the goals of diversity, the mandate to create a government that looks like America, is not a mandate to violate merit principles and veterans preference.
These improper Outstanding Scholar appointments resulted in the loss of appointment opportunity for veterans and Interagency Career Transition Program eligibles, individuals entitled to preference in hiring. In addition, the basic concept of fair and open competition was severely compromised -- just as it was with the false duty station appointments.
It is also disturbing to note that even after we had communicated these findings to NCUA, four additional improper hires were made.
Considering the seriousness and pervasiveness of the violations I have described, OPM had to take decisive action to protect the merit system. Therefore, on August 8, 1997, we took the extraordinary step of decertifying their delegated examining unit and we withdrew their appointing authority. We have also referred this matter to the Office of the Special Counsel for investigation.
Our report indicates the corrective actions we have directed NCUA to take. In summary, they must take the actions necessary to ensure that all qualified candidates receive appropriate consideration for the positions that were fraudulently filled. This will require re-announcing many vacancies and reworking many certificates.
We are also requiring NCUA managers and staff to receive training on these important principles. And until we are confident that the agency can perform in accordance with all appropriate laws, OPM will not consider restoring their appointing or examining authorities.
I have no way of fully quantifying the cost of these actions. NCUA will expend considerable staff time on the corrective actions and the loss of appointing and examining authority means more time will be spent on making appointments. Obviously OPM and the Special Counsel will be expending considerable staff time and money. If the Special Counsel determines further action is necessary, more time and effort will be required. Equally important, however, are the intangible costs in terms of low employee morale, staff turnover, and the loss of public confidence and public trust in this agency.
While it is a costly endeavor for both NCUA and the other agencies involved, I am sure the Subcommittee appreciates the much higher cost to all of us if these serious violations of the merit system principles and veterans preference went uncorrected.
That concludes my prepared statement. I will be happy to answer any questions the Subcommittee might have.
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Web page created 23 October 1997