oversight

Human Capital: HHS and EPA Can Improve Practices Under Special Hiring Authorities

Published by the Government Accountability Office on 2012-07-09.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

             United States Government Accountability Office

GAO          Report to Congressional Requesters




July 2012
             HUMAN CAPITAL

             HHS and EPA Can
             Improve Practices
             Under Special Hiring
             Authorities




GAO-12-692
                                              July 2012

                                              HUMAN CAPITAL
                                              HHS and EPA Can Improve Practices Under Special
                                              Hiring Authorities
Highlights of GAO-12-692, a report to
congressional requesters




Why GAO Did This Study                        What GAO Found
HHS and EPA have been using special           The Department of Health and Human Services’ (HHS) use of special hiring
hiring authority provided under 42            authorities under 42 U.S.C. §§ 209(f) and (g) has increased in recent years.
U.S.C. §§209(f) and (g)—referred to in        Nearly all HHS Title 42 employees work in one of three HHS operating divisions:
this report generally as Title 42 or          the National Institutes of Health (NIH), the Food and Drug Administration (FDA),
specifically as section 209(f) or section     and the Centers for Disease Control and Prevention (CDC).
209(g)—to appoint individuals to fill
mission critical positions in science and     HHS Operating Divisions Have Increased Their Use of Title 42, Sections 209(f) and (g)
medicine and, in many cases, pay              Appointments, 2006 through 2010
them above salary limits usually               Operating                                                                            Percent
                                               division           2006         2007         2008           2009         2010        changea
applicable to federal government
employees. GAO was asked to assess                NIH                    4,238    4,389      4,569        4,721         4,879         15%
the extent to which HHS and EPA have              FDA                      559     564         595          816           862           54
(1) used authority under sections                 CDC                      512     603         708          796           929           81
209(f) and (g) to appoint and                     Other                      52     45          44           38            27          (48)
compensate employees since 2006,                  Total                  5,361    5,601      5,916        6,371         6,697         25%
and (2) followed applicable agency            Source: GAO analysis of HHS data.
policy, guidance, and internal controls       a
                                              Figures in parentheses indicate a decrease.
for appointments and compensation.
GAO analyzed agency Title 42 data,
interviewed agency officials, and             Title 42 employees at HHS serve in a variety of areas, including scientific and
conducted file reviews.                       medical research support and in senior, director-level leadership positions. At
                                              NIH, one-quarter of all employees, and 44 percent of its researchers and clinical
What GAO Recommends                           practitioners, were Title 42 appointees. HHS reported that Title 42 enables the
                                              agency to quickly fill knowledge gaps so medical research can progress and to
GAO recommends HHS (1) ensure
                                              respond to medical emergencies. HHS further reported Title 42 provides the
section authority—209(f) or 209(g)—be
consistently entered in appropriate           compensation flexibility to compete with the private sector. In 2010, 1,461 HHS
personnel systems, (2) systematically         Title 42 employees earned salaries over Executive Level IV ($155,500 in 2010).
document how policy requirements              HHS does not have reliable data to manage and provide oversight of its use of
were fulfilled when hiring or converting      Title 42 because the section authority used to hire Title 42 employees is not
209(f) employees, and (3) ensure              consistently recorded into personnel systems. Moreover, HHS did not
agencywide 209(g) policy currently in         consistently adhere to certain sections of its 209(f) policy. For example, the policy
development provides guidance for
                                              states that 209(f) appointments may only be made after non-Title 42 authorities
documenting the basis for employee
                                              have failed to yield a qualified candidate, but GAO found few instances where
compensation. GAO recommends EPA
develop and document a systematic
                                              such efforts were documented. HHS has recently issued updated 209(f) policy
approach for ensuring Title 42                that addresses most of these issues. HHS is developing agencywide policy for
employees are compliant with ethics           appointing and compensating fellows under 209(g), but it is not clear the policy
requirements after appointment.               will address important issues such as documenting the basis for compensation.

HHS agreed with GAO’s                         Since 2006, the Environmental Protection Agency (EPA) has used section 209(g)
recommendations, while EPA                    to appoint 17 employees. Title 42 employees lead scientific research initiatives
disagreed, citing certain actions             and some manage or direct a division or office. According to EPA officials, Title
already taken. GAO acknowledges               42 provides the flexibility to be competitive in recruiting top experts who are also
EPA’s plans to address these issues,          sought by private industry, academia, and others. Also, Title 42 provides the
but maintains the recommendation is           appointment flexibility needed to align experts with specific skills to changing
needed to ensure implementation.              scientific priorities. Fifteen of EPA’s 17 Title 42 employees earned salaries over
                                              Executive Level IV in 2010. EPA appointment and compensation practices were
View GAO-12-692. For more information,        generally consistent with its guidance; however, EPA does not have post-
contact Robert Goldenkoff at (202) 512-2757
or goldenkoffr@gao.gov.
                                              appointment procedures in place to ensure Title 42 employees meet ethics
                                              requirements to which they have previously agreed.
                                                                                            United States Government Accountability Office
Contents


Letter                                                                                     1
               Background                                                                  4
               HHS Has Increased Its Use of Title 42, but More Reliable Data
                 Could Improve HHS’s Oversight                                             9
               HHS Did Not Consistently Adhere to Sections of Its Title 42 Policy
                 and Lacks Guidance for Some Authority Provisions                        18
               EPA Employs a Limited Number of Title 42 Fellows, Primarily in
                 Leadership Roles                                                        24
               EPA Appointment and Compensation Practices Were Generally
                 Consistent with Its Guidance, but EPA Could Improve
                 Resolution of Potential Conflicts of Interest                           28
               Conclusions                                                               32
               Recommendations for Executive Action                                      33
               Agency Comments and Our Evaluation                                        34

Appendix I     Objectives, Scope, and Methodology                                         38



Appendix II    Comments from the Department of Health and Human Services                  40



Appendix III   Comments from the Environmental Protection Agency                          44



Appendix IV    GAO Contact and Staff Acknowledgments                                      47



Tables
               Table 1: HHS Operating Divisions Have Increased Their Use of
                        Sections 209(f) and (g) Appointments, 2006 through 2010          10
               Table 2: NIH Relied on Title 42 for a Greater Percentage of Its Total
                        Workforce and Research and Clinical Practitioners than
                        FDA and CDC, 2010                                                12
               Table 3: Most Common Title 42 Occupations at NIH and
                        Characteristics                                                  13
               Table 4: HHS Title 42 Employees with Base Salaries within or
                        Exceeding Federal Executive Salary Levels, 2010                  15




               Page i                                                GAO-12-692 Human Capital
          Table 5: HHS Compliance with Certain Sections of Its Policy for
                   Hiring and Converting Employees Under Section 209(f) for
                   Cases Reviewed                                                                   20
          Table 6: Number of EPA Title 42 Fellows with Salaries in Federal
                   Executive Salary Levels, 2010                                                    27
          Table 7: EPA Appointment and Compensation Practices Were
                   Generally Consistent with Guidance                                               29


Figures
          Figure 1: HHS Organizational Structure                                                    6
          Figure 2: Most Title 42, Sections 209(f) and (g) Employees Served
                   at NIH, FDA, or CDC, 2010                                                        9
          Figure 3: Cumulative Number of EPA Title 42 Staff, 2006 through
                   2011                                                                             25




          Abbreviations

          CDC               Centers for Disease Control and Prevention
          EHRP              Enterprise Human Resources and Payroll
          EPA               Environmental Protection Agency
          FDA               Food and Drug Administration
          HHS               Department of Health and Human Services
          NCCT              National Center for Computational Toxicology
          NIH               National Institutes of Health
          OGC               Office of General Counsel
          ORD               Office of Research and Development
          PHS               Public Health Service


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          Page ii                                                         GAO-12-692 Human Capital
United States Government Accountability Office
Washington, DC 20548




                                   July 9, 2012

                                   The Honorable Denny Rehberg
                                   Chairman
                                   Subcommittee on Labor, Health and Human Services, Education, and
                                    Related Agencies
                                   Committee on Appropriations
                                   House of Representatives

                                   The Honorable Cliff Stearns
                                   Chairman
                                   Subcommittee on Oversight and Investigations
                                   Committee on Energy and Commerce
                                   House of Representatives

                                   The Honorable Joe Barton
                                   House of Representatives

                                   The Honorable Michael Burgess
                                   House of Representatives

                                   The Department of Health and Human Services (HHS) and the
                                   Environmental Protection Agency (EPA) are among the agencies that
                                   have cited difficulties in recruiting and retaining individuals in medicine,
                                   science, engineering, and other related fields in support of their missions.
                                   One reason for these difficulties, according to agency officials, is salaries
                                   available under typical federal government hiring authorities are
                                   sometimes not competitive with those in the private sector for individuals
                                   in these highly specialized and competitive fields. Since 2001, we have
                                   designated strategic human capital management a government-wide
                                   high-risk area in part because of the need to address current and
                                   emerging critical skills gaps that are undermining agencies’ abilities to
                                   meet their missions. 1

                                   Effective use of various human capital flexibilities is one way agencies
                                   can improve their efforts to recruit, hire, and manage their workforces.
                                   Such flexibilities, provided under 42 U.S.C. §§209(f) and 209(g)—referred



                                   1
                                    GAO, High-Risk Series: An Update, GAO-11-278 (Washington, D.C.: Feb. 2011).




                                   Page 1                                                     GAO-12-692 Human Capital
to in this report generally as Title 42 or specifically as sections 209(f) or
(g)—are available only to HHS and EPA. 2 Section 209(f) authorizes the
employment of special consultants to assist and advise in the operation of
the Public Health Service (PHS), while section 209(g) authorizes
fellowships in the PHS for scientists who may be assigned to studies and
investigations for the term of their fellowships. HHS has used sections
209(f) and (g) and EPA has used section 209(g) to appoint individuals
from the private sector and academia as well as to convert federal
government employees under other pay systems—such as the General
Schedule—to Title 42.

In implementing Title 42, the agencies have set higher pay limits than
those provided under typical civil service hiring authorities. 3 Per HHS
policy, the annual base salary for many appointments under Title 42 at
HHS cannot exceed $250,000 per calendar year, with total compensation
not to exceed $275,000 unless approved by the Secretary. 4 In a related
effort to this audit, we are issuing a legal opinion on whether there are
any statutory caps on pay for consultants and fellows appointed under
sections 209(f) and (g). Similarly, EPA policy caps annual base salary for
Title 42 employees at $250,000, with total compensation that may not
exceed $275,000. According to HHS and EPA officials, the pay setting
flexibility is needed to compete with the private sector and academia to
recruit and retain critical personnel. Because agencies exercise broad
discretion in their use of Title 42 authority, it is important that they have
robust policies and internal control mechanisms in place to implement
and monitor use of the authority. To obtain a better understanding of the
appointment and compensation practices under sections 209(f) and
209(g), you asked us to assess the extent to which HHS and EPA (1)
have used authority under sections 209(f) and (g) to appoint and set pay



2
 HHS has other special hiring authorities provided under Title 42 of the U.S. Code, but this
report deals exclusively with the special hiring authorities under 42 U.S.C. §§ 209(f) and
(g).
3
 Most federal employees are paid under the General Schedule. The highest base pay
amount under the General Schedule in 2012 is $155,500.
4
 The salary and compensation limits were lowered in HHS policy issued in February 2012.
In March 2007, HHS limited annual base salary for employees hired under section 209(f)
to $350,000 and $375,000 in total compensation. These higher limits were in place during
most years of our review of HHS’s Title 42 use (2006 through 2010). Total compensation
at HHS includes base pay; recruitment and retention incentives; and cash awards, such
as performance bonuses.




Page 2                                                          GAO-12-692 Human Capital
for employees since January 2006, and (2) have followed applicable
agency policy, guidance, and internal controls for appointments and
compensation. 5

To assess the extent to which HHS and EPA have used authority under
sections 209(f) and (g) to appoint and set pay for employees, we obtained
agency personnel data that we analyzed to describe: (1) appointment and
compensation trends at HHS and EPA since 2006, including the number
of Title 42 employees; (2) the types of occupations and positions held by
Title 42 employees; (3) compensation rates, including the number of Title
42 employees earning more than certain federal salary levels; (4) the
number of Title 42 employees receiving nonsalary payments; and (5) the
number of civil servants that have been converted to Title 42
appointments and the compensation changes associated with those
conversions. We conducted a variety of data tests and interviews with
agency officials to correct and refine HHS Title 42 data and were able to
develop a data set that was reliable for our purposes. For EPA, we
performed data testing, interviewed agency officials, and compared data
to information found in official agency documents and determined that
EPA’s data were reliable for our purposes. To determine the extent to
which HHS and EPA have followed applicable policy, guidance, and
internal controls, we reviewed the policies and guidance at HHS and EPA
to understand the conditions under which Title 42 employees are to be
recruited, appointed, compensated, and managed. We conducted 63
case file reviews at HHS and 10 at EPA to document appointment and
compensation practices and compared those practices to agency policies
and guidance. Those cases were chosen based on a random selection of
cases that had characteristics related to various areas of HHS’s and
EPA’s Title 42 policy and guidance. We determined the number of case
file reviews was sufficient to identify incidences where practices were or
were not consistent with policies and guidance, but our findings are not
generalizable to the entire population of Title 42 employees at HHS or
EPA. See appendix I for a more detailed discussion of our objectives,
scope, and methodology.




5
 According to HHS human resource officials, personnel data prior to 2006 were likely not
reliable for our analysis. EPA began using Title 42 in 2006. HHS data are available
through the end of 2010, the last year of complete data available at the time of this study;
and at EPA, through the end of 2011.




Page 3                                                           GAO-12-692 Human Capital
             We conducted this performance audit from May 2011 through July 2012
             in accordance with generally accepted government auditing standards.
             Those standards require that we plan and perform the audit to obtain
             sufficient, appropriate evidence to provide a reasonable basis for our
             findings and conclusions based on our audit objectives. We believe that
             the evidence obtained provides a reasonable basis for our findings and
             conclusions based on our audit objectives.


             The authority to appoint and set pay for special consultants and fellows
Background   was provided as part of the Public Health Service Act in 1944. 6 Section
             209(f) authorizes the employment of special consultants to assist and
             advise in the operation of the PHS. The PHS is comprised of most
             operating divisions within HHS—including the National Institutes of Health
             (NIH), the Food and Drug Administration (FDA), and the Centers for
             Disease Control and Prevention (CDC)—as well as some staff divisions
             within the Office of the Secretary. See figure 1 for HHS’s organizational
             structure, including those operating divisions and main staff divisions
             considered to be within the PHS. Section 209(g) authorizes fellowships in
             the PHS for individual scientists who may be assigned for studies and
             investigations either in the United States or abroad. Sections 209(f) and
             (g) both authorize the establishment of regulations to further implement
             these authorities. HHS Office of the Secretary develops agencywide
             policy and guidance and operating divisions may set additional or
             supplemental policy as necessary. In 2005, Congress provided EPA with
             the authority to use section 209 to make a limited number of
             appointments in its Office of Research and Development (ORD). 7
             Congress initially granted this authority to EPA for fiscal years 2006
             through 2011, but Congress amended the authority twice and currently
             EPA is permitted to employ up to 30 persons at any one time through




             6
              Pub. L. No. 78-410, § 208(c) and (d), 58 Stat. 682, 686 (July 1, 1944). These authorities
             were expansions of employment authorities originally provided to the National Cancer
             Institute in 1937. H. R. Rep. No. 1364 (1944).
             7
              Pub. L. No. 109-54, Title II, 119 Stat. 499, 531 (Aug 2, 2005). Although the legislation
             refers only to section 209, the legislative history of these grants of authority to EPA
             provides the intent was to grant EPA use of the authorities under sections (f), (g), and (h)
             of section 209. Subsection (h) of section 209 permits noncitizens to be appointed and
             compensated under sections 209(f) and (g).




             Page 4                                                            GAO-12-692 Human Capital
fiscal year 2015. 8 EPA issued regulations in 2006 implementing this
authority, which closely follow HHS regulations. 9




8
 Pub. L. No. 111-8, title II, 123 Stat. 524, 729 (Mar. 11, 2009) and Pub. L. No. 111-88,
Division A, title II, 123 Stat. 2904, 2938 (Dec. 30, 2009).
9
 40 C.F.R. part 18.




Page 5                                                           GAO-12-692 Human Capital
Figure 1: HHS Organizational Structure




                                         HHS regulations for section 209(f) provide that special consultants may
                                         only be appointed when the PHS cannot obtain services through regular



                                         Page 6                                             GAO-12-692 Human Capital
civil service appointments or under the compensation provisions of the
Classification Act of 1949. 10 The regulations further provide that rates of
compensation for special consultants are to be set in accordance with
criteria established by the Surgeon General. The Surgeon General is part
of the Office of the Assistant Secretary for Health. HHS has used this
authority, for example, to appoint doctors and others with expertise in
specialty fields to initiate or provide assistance in conducting medical
research and set pay for those individuals at rates above those allowed
under other federal government pay systems.

HHS regulations covering section 209(g) provide that fellowships may be
provided to secure the services of talented scientists for limited duration
(up to 5 years) for health-related research, studies, and investigations. 11
The regulations further provide that the Secretary may authorize
procedures to extend the term of fellowships, may authorize stipends for
the fellows, and is responsible for establishing appointment procedures
beyond those set forth in the regulations. 12

Some Title 42 employees earn pay within or exceeding pay levels found
in the Executive Schedule. The Executive Schedule is a five-level, basic
pay schedule applicable to the highest-ranking executive appointments in
the federal government. Executive Schedule pay rates range from
Executive Level V ($145,700 since 2010) to Executive Level I ($199,700
since 2010).

Only HHS and EPA are authorized to use Title 42 hiring authority. By
contrast, regular hiring authorities such as those under title 5 of the U.S.
Code—commonly referred to as Title 5—may be used by any federal
agency. 13 Pursuant to HHS and EPA policy, employees at HHS and EPA
originally hired under Title 5 or other authorities may be converted to Title
42 in some circumstances. Under these policies, employees hired under


10
  42 C.F.R. § 22.3. The Classification Act of 1949 established the General Schedule, a
single, nationwide pay structure for federal white-collar employees that today consists of
15 grades, each with 10 pay steps.
11
  42 C.F.R. § 61.32.
12
     42 C.F.R. §§ 61.33 and 61.37-38.
13
  A small number of agency-specific personnel authorities, including hiring authorities, are
contained in subpart I of part III of Title 5. For example, personnel flexibilities relating to
the Internal Revenue Service are contained in chapter 95 of Title 5.




Page 7                                                             GAO-12-692 Human Capital
Title 42 are eligible for performance bonuses, incentives, and other
nonsalary payments made available to federal employees compensated
under Title 5.

Title 42 employees most frequently work within one of three operating
divisions:

•   NIH is the nation’s medical research agency and is comprised of the
    Office of the Director and 27 institutes and centers, including the
    National Cancer Institute; National Institute on Aging; National Heart,
    Lung, and Blood Institute; and the National Center for Complementary
    and Alternative Medicine. Each institute and center has its own
    specific research agenda, often focused on a particular disease or
    body system. As the central office at NIH, the Office of the Director
    establishes NIH-specific policy and oversees the institutes and
    centers to ensure they operate in accordance with said policy. While
    most of its budget goes to extramural research personnel at more
    than 3,000 universities and research institutions, NIH also has
    intramural research laboratories on the NIH main campus in
    Bethesda, Maryland. The main campus is also home to the NIH
    Clinical Center, which is the largest hospital in the world totally
    dedicated to clinical research.
•   FDA is responsible for, among other things, protecting the public
    health by assuring the safety, efficacy, and security of human and
    veterinary drugs, biological products, medical devices, the nation’s
    food supply, cosmetics, and products that emit radiation. FDA is also
    responsible for regulating tobacco products.
•   CDC conducts activities such as identifying and defining preventable
    health problems and maintaining active surveillance of diseases;
    serving as the PHS lead agency in developing and implementing
    operational programs relating to environmental health problems; and
    operational research aimed at developing and testing effective
    disease prevention, control, and health promotion programs.

EPA uses section 209(g) as the basis for hiring some scientists within
ORD, the scientific research arm of EPA. ORD’s work at EPA laboratory
and research centers provide the science and technology to identify
environmental hazards, assess risks to public health and ecosystems,
and determine how best to control or prevent pollution. According to EPA
documents and officials, EPA uses Title 42 to secure the services of
experienced and talented scientists for renewable appointments where,
because of the nature of the work and expertise needed, regular hiring




Page 8                                               GAO-12-692 Human Capital
                        authorities are impractical. EPA has not made appointments using section
                        209(f).


                        During 2010, HHS had 6,697 employees who were appointed under
HHS Has Increased Its   sections 209(f) or (g). 14 All but 27 of these employees served at NIH,
Use of Title 42, but    FDA, or CDC, while the remaining employees served in the Office of the
                        Secretary or within other operating divisions, as shown in figure 2. 15
More Reliable Data
Could Improve HHS’s     Figure 2: Most Title 42, Sections 209(f) and (g) Employees Served at NIH, FDA, or
Oversight               CDC, 2010




                        The number of employees appointed under sections 209(f) and (g)
                        increased overall at HHS by 25 percent from 2006 through 2010, as
                        shown in table 1. Since 2006, the number of Title 42 employees grew by
                        15 percent at NIH, by 54 percent at FDA, and by 81 percent at CDC,




                        14
                          All years are in calendar years unless otherwise stated.
                        15
                           Title 42 employees in the Office of the Secretary served in offices within the PHS and
                        Title 42 employees in other operating divisions served in operating divisions within the
                        PHS.




                        Page 9                                                           GAO-12-692 Human Capital
while declining by 48 percent at the Office of the Secretary and all other
operating divisions.

Table 1: HHS Operating Divisions Have Increased Their Use of Sections 209(f) and
(g) Appointments, 2006 through 2010

                                                                                   Percent
    Operating division              2006    2007    2008    2009         2010      changea
    NIH                             4,238   4,389   4,569   4,721        4,879         15%
    FDA                              559     564     595     816          862            54
    CDC                              512     603     708     796          929            81
    Other                             52      45      44      38           27          (48)
    Total                           5,361   5,601   5,916   6,371        6,697         25%
Source: GAO analysis of HHS data.
a
Figures in parentheses indicate a decrease.




The increased use of Title 42 authority came during a period when HHS
made recruiting and retaining mission-critical elements of its workforce a
priority. HHS’s 2007-2012 Strategic Plan included strategic objectives: (1)
recruiting, developing, and retaining a competent health care workforce,
and (2) strengthening the pool of qualified health and behavioral science
researchers. HHS officials generally attributed the increases in Title 42
employees to the agency’s response to urgent public health matters and
effects of the economic downturn on the private sector and academia,
which, according to officials, made the agency more attractive to
prospective or on-board employees. Specifically, according to HHS:

•      The 15 percent increase from 2006 through 2010 at NIH can be
       attributed, in part, to the effects of the economic downturn on the
       biomedical research labor market. Officials told us that as extramural
       research funding available in the private sector and academia is
       shrinking, NIH is able to use Title 42 to more successfully recruit and
       retain biomedical investigators and clinical specialists.
•      The spike in Title 42 appointments at FDA in 2008 and 2009 is a
       result of the Food and Drug Administration Amendments Act of 2007
       and the Food Protection Plan, FDA’s strategy for protecting the




Page 10                                                             GAO-12-692 Human Capital
     nation’s food supply. 16 Additionally, in 2008 FDA launched its first
     class of Commissioner’s Fellows (hired under section 209 (g) for up to
     a two year period) beginning with 50 fellows, another class of 50 in
     2009, and a third class of 45 in 2010. 17
•    At CDC, increased use of Title 42 was attributed to the urgency of
     certain programs such as the overseas Global AIDS Program and
     those under the Office of Public Health Preparedness and Response.
     For these programs, officials told us they needed employees with
     specialized scientific skills or training and experience and would not
     have been able to obtain them without Title 42.
As discussed later, we were unable to determine which section
authority—sections 209(f) or (g)—was used more often because HHS
section authority data was not reliable for this purpose.

As shown in table 2, NIH relies on Title 42 authority for a greater
percentage of its total workforce than does FDA and CDC. In 2010, 25
percent of all NIH employees were Title 42 employees, while 10 percent
of CDC employees and 6 percent of FDA employees were Title 42. NIH
relied on Title 42 authority for a substantial portion—44 percent—of its
total research and clinical practitioner workforce. 18




16
  The Food and Drug Administration Amendments Act of 2007, among other things,
increased FDA’s oversight responsibilities for food, drug, and medical device safety. Pub.
L. No. 110-85, 121 Stat. 823 (Sept. 27, 2007).
17
  FDA offers the Commissioner’s Fellowship Program for health professionals and
scientists to receive training and experience at the FDA. Fellows are to explore a specific
aspect of FDA regulatory science including biology, physics, and epidemiology.
18
   To determine the number of researchers and clinical practitioners, we counted the
number of operating division employees categorized as providing research, development,
or clinical practice services in the Office of Personnel Management’s Central Personnel
Data File. Researchers are categorized as those who provide systematic, critical,
intensive investigation directed toward the development of new or fuller scientific
knowledge of the subject studied. Clinical practitioners are those who provide direct
clinical and related medical services to patients/clients including examination, testing,
diagnosis, treatment, therapy, casework, counseling, disability evaluation, and related
patient care services. We also included those categorized as in development. Those
individuals provide systematic application of scientific knowledge directed toward the
creation of new or substantially improved equipment, devices, systems, mathematical
models, and others.




Page 11                                                          GAO-12-692 Human Capital
Table 2: NIH Relied on Title 42 for a Greater Percentage of Its Total Workforce and Research and Clinical Practitioners than
FDA and CDC, 2010

                                                         Title 42 percentage of                                     Title 42 percentage of
                    Title 42       Total operating               total operating            Total researchers and researchers and clinical
Agency            employees    division workforce            division workforce              clinical practitioners           practitioners
NIH                    4,879                19,292                                25%                      11,040                      44%
FDA                      862                14,617                                      6                  10,025                         9
CDC                      929                  9,707                                    10                   5,817                        16
                                          Source: GAO analysis of HHS and CPDF data.




Title 42 Employees Serve                  Title 42 employees at HHS serve in a variety of functional areas, including
in Various Functions                      scientific and medical research support and in senior, director-level
                                          leadership positions. Base salary ranges for Title 42 employees varied by
                                          operating division and occupation. In 2010, almost 60 percent of Title 42
                                          employees at NIH served in one of five general occupations: staff
                                          scientist, research fellow, senior investigator, clinical research nurse, and
                                          clinical fellow. Table 3 describes some of the general responsibilities and
                                          duties, educational characteristics, and salary data for these occupations
                                          at NIH.




                                          Page 12                                                                   GAO-12-692 Human Capital
Table 3: Most Common Title 42 Occupations at NIH and Characteristics

Occupation (number of Title 42
employees in 2010)                     Characteristics                                          Salarya
Staff Scientist (1,103)                •        Supports the long-term research of a            •    Base salary range: $82,000-200,000
                                                senior investigator and independently           •    Average base salary: $118,000
                                                designs experiments, but does not have
                                                responsibilities for initiating new             •    Median base salary: $114,000
                                                research programs
                                       •        Usually has a doctoral degree
Research Fellow (666)                  •        Scientists obtaining experience in              •    Base salary range: $45,000-112,000
                                                biomedical research while providing a           •    Average base salary: $70,000
                                                service relevant to the NIH’s program
                                                needs                                           •    Median base salary: $69,000
                                       •        Has a doctoral degree
Senior Investigator (521)              •        Has been granted tenure.b Some senior           •    Base salary range: $117,000-350,000
                                                investigators are assigned                      •    Average base salary: $192,000
                                                organizational responsibilities in the
                                                institute or center, that is, section or        •    Median base salary: $195,000
                                                branch chief
                                       •        Has a doctoral degree
                                c
Clinical Research Nurse (347)          •        Specializes in the care of research             •    Base salary range: $62,000-96,000
                                                participants and is responsible for             •    Average and median base salary:
                                                assuring participant safety, formulating             $78,000
                                                patient care plans, integrity of protocol
                                                implementation, accuracy of data
                                                collection, and recording
                                       •        Nursing degree or diploma from a
                                                professional nursing program
Clinical Fellow (249)                  •        Participates in protocol-based clinical         •    Base salary range: $57,000-137,000
                                                research (i.e., research with people            •    Average base salary: $84,000
                                                serving as volunteer participants) as
                                                well as laboratory research                     •    Median base salary: $82,000
                                       •        Has a doctoral-level health degree with
                                                interest in biomedical research relevant
                                                to NIH program needs
                                        Source: GAO analysis of HHS data and documents.
                                        a
                                            Salary figures as of 2010. All figures are rounded to the nearest thousand dollars.
                                        b
                                         Tenure at NIH differs from tenure at an academic institution. Tenure at NIH is defined as the long-
                                        term commitment of salary, personnel, and research resources needed to conduct an independent
                                        research program within the scope of the institutes’ missions, and subject to regular review. Tenure
                                        may be conferred on Title 42 employees despite the nonpermanent nature of the position.
                                        c
                                         As part of the sunsetting of the Clinical Research Support pilot, NIH is currently phasing out Title 42
                                        appointments for nurses.


                                        At FDA and CDC, the most common occupation of Title 42 employees is
                                        a fellow. In 2010, 340 (39 percent) of FDA’s Title 42 employees were staff
                                        fellows. These positions are for promising research and regulatory review
                                        scientists. In general, staff fellows at FDA conduct or support research,


                                        Page 13                                                                     GAO-12-692 Human Capital
                           provide technical direction and supervision to other researchers, publish
                           scientific articles, and review contract and grant proposals designed to
                           support their research projects. Staff fellows must have a doctoral degree
                           in bio-medical, behavioral, or related science and, according to FDA
                           policy, total compensation may not exceed certain pay limits ($155,500 in
                           2010) unless the Director of Human Resources and Management and
                           Services grants an exception. FDA staff fellows’ base salary range in
                           2010 is approximately $42,000 to $224,000, with an average base salary
                           of about $96,000 and a median salary of about $92,000. Three of 340
                           staff fellows at FDA earned more than $155,500 in 2010.

                           Of CDC’s Title 42 employees in 2010, 687 (74 percent) were senior
                           service fellows or associate service fellows appointed to study areas such
                           as basic and applied research in medical, physical, biological,
                           mathematical, social, biometric, epidemiological, behavioral, computer
                           sciences, and other fields directly related to the mission of CDC. Senior
                           service fellows must have a doctoral degree and associate service fellows
                           must have a master’s degree. Senior service fellows had a base salary
                           range in 2010 of approximately $49,000 to $155,500, with an average
                           base salary of about $103,000 and a median salary of about $100,000.
                           Associate service fellows had a base salary range of approximately
                           $44,000 to $93,000, with an average base salary of about $69,000 and a
                           median salary of about $71,000.


Some Title 42 Employees    The average base salary for all HHS Title 42 employees in 2010 was
Are Paid Above Executive   about $116,000 and the median salary was about $101,000. More than
Salary Levels              one-fifth of all Title 42 employees at HHS, however, earned a base salary
                           above Executive Level IV ($155,500 in 2010). Congress regularly refers
                           to executive salary levels in order to express minimum or maximum levels
                           of pay authorized for positions in the federal government. For example,
                           Congress has imposed a cap of Executive Level IV on salary (i.e., basic
                           pay) rates where pay is fixed by administrative action under 5 U.S.C. §
                           5373. In a related effort to this audit, we are issuing a legal opinion on
                           whether there are any statutory caps on pay for consultants and fellows
                           appointed under 42 U.S.C. §§ 209(f) or (g), including whether the cap
                           under section 5373 applies. Table 4 shows the number of Title 42
                           employees whose base salary is within or above the various Executive
                           Salary Levels in 2010.




                           Page 14                                             GAO-12-692 Human Capital
Table 4: HHS Title 42 Employees with Base Salaries within or Exceeding Federal
Executive Salary Levels, 2010

                                                                           Number of Title 42
    Executive level                                                             employeesa
    At or above Executive Level I ($199,700)                                               629
    Within Executive Levels I and II ($179,700-199,699)                                    319
    Within Executive Levels II and III ($165,300-179,699)                                  295
    Within Executive Levels III and IV ($155,500-165,299)                                  218
    Total                                                                                 1,461
Source: GAO analysis of HHS data.
a
The remaining 5,236 Title 42 employees had salaries below Executive Level IV ($155,500)


HHS has converted a number of employees from positions under the
General Schedule or other pay systems to positions under Title 42. Of the
1,183 new Title 42 appointees in 2010, 45 of them—or about 4 percent—
were current HHS employees that were converted to Title 42 positions.
Thirty of these conversions occurred at NIH. We also found that
employees converted to Title 42 from other pay systems generally earned
higher compensation than in their previous position. Employees
converted in 2010 earned, on average, $34,000 more in base salary than
earned in their previous position. However, many did not receive the
same amount of nonsalary payments (including retention incentives)
received while employed under the General Schedule or other pay
system. Therefore, the average increase in total compensation (base
salary and incentive or other nonsalary payments) was about $14,000 in
2010.

Under HHS policy, Title 42 employees are eligible to receive performance
bonuses; recruitment, retention, and relocation incentives; and other
nonsalary payments that are available to other HHS employees. 19 In
2010, HHS issued nonsalary payments to 6,336 of its 6,697 Title 42
employees. 20 Seventy-one percent of Title 42 employees earned ratings-
based individual cash awards. Less than 1 percent (60) of Title 42


19
  According to HHS, these nonsalary payments are not made under the Title 5 authorities
providing for such payments, but rather are made under the compensation authority of 42
U.S.C. § 209(f) and (g).
20
  The dollar value of these nonsalary payments were not available on an individual basis
in the data provided by HHS, and as a result we could not determine the range or average
amount of the various types of nonsalary payments.




Page 15                                                             GAO-12-692 Human Capital
                              employees received nonsalary payments in the form of recruitment,
                              retention, or relocation incentives. 21

                              According to senior officials at HHS’s human resource office and NIH,
                              Title 42 authority provides two primary benefits—appointment agility and
                              compensation flexibility. These officials said appointment agility enables
                              the agency to hire scientists, doctors, and other consultants to quickly fill
                              knowledge, skill, and ability gaps so that medical research can move
                              forward and to respond to medical emergencies. For example, according
                              to HHS officials, the agency used Title 42 authority to quickly hire experts
                              needed to develop a vaccine in response to the H1N1 flu pandemic of
                              2009. Appointment agility is also important because many research
                              projects, particularly those at NIH, are not meant to be long-term and Title
                              42 appointments can align with project time frames better than hiring full-
                              time permanent staff under regular hiring authorities. In some cases, the
                              temporary appointment of a researcher with highly-specialized skills to
                              assist with a limited-scope, limited-duration study may be more
                              appropriate than a permanent position.

                              According to officials, compensation flexibility helps HHS compete with
                              the private sector and academia to hire and retain highly qualified
                              employees with rare and critical skill sets, such as neuroscientists,
                              applied researchers in dietary intakes, and engineers that can operate
                              particle accelerators. HHS human resource officials stated the salaries
                              HHS can offer to its top researchers are often not commensurate with
                              private sector salaries. However, they said the higher compensation limits
                              under Title 42 combined with other benefits—such as name recognition
                              and access to advanced research equipment and technology not often
                              available in the private sector or academia—can help offset
                              compensation disparities and make HHS attractive to researchers,
                              doctors, and scientists.


HHS Does Not Have             Because HHS does not consistently electronically record the authority
Reliable Data on the Use of   under which many of its Title 42 employees were appointed, the number
Its Title 42 Authority        of employees hired under either section 209(f) or (g) could not be
                              determined. When an employee is hired under Title 42 authority, HHS



                              21
                                Six of our case studies were Title 42 employees receiving an incentive payment, and in
                              all six cases there was a documented basis supporting the need for the incentive.




                              Page 16                                                        GAO-12-692 Human Capital
human resource officials create a personnel record in its central
personnel transaction system, the Enterprise Human Resources and
Payroll (EHRP) system. A required field in the personnel record exists to
select a code from a drop-down menu designating the general authority
under which the individual was hired, such as Title 42 or Title 5 authority.
The personnel record also contains an open-ended text field to manually
enter a specific section authority such as sections 209(f) or (g), applicable
to Title 42 authority. Our analysis of HHS data found thousands of cases
where the section authority applicable to Title 42 was not recorded in
EHRP. We also found that when the section authority field was used,
there were more than 400 different types of entries made in the EHRP
records.

According to HHS officials, there are some data elements in the EHRP
system—including the section authority under Title 42—that are
unreliable. The majority of the unreliable data elements are those from
nonrequired data entry fields. Whereas required fields must be completed
before a personnel action is saved in the system, Title 42 section
authority is a free-form, open-ended field and there is no system control in
place to ensure the field is recorded or recorded accurately prior to saving
the personnel action. Our case reviews found the section authority for
appointment—such as sections 209(f) or 209(g)—was always
documented on hard copy personnel action forms, but in many cases was
not recorded in personnel records in the EHRP system.

We have previously reported that effective workforce planning and
management require that human capital staff and other managers base
their workforce analyses and decisions on complete and accurate
personnel data. 22 The lack of reliable information in this area may
preclude HHS, Congress, and other organizations from providing effective
oversight of the Title 42 program and evaluating its effectiveness. 23 For
example, the lack of section authority data in EHRP has made it difficult
for HHS to provide accurate headcounts of employees hired under
sections 209(f) or (g) and resulted in HHS overstating the number and



22
 GAO, Foreign Assistance: Strategic Workforce Planning Can Help USAID Address
Current and Future Challenges, GAO-03-946 (Washington, D.C.: Aug. 22, 2003).
23
  We conducted a variety of data tests and interviews with agency officials to correct and
refine HHS Title 42 data and were able to develop a data set that was reliable for the
purposes of this report.




Page 17                                                         GAO-12-692 Human Capital
                            operating division of its employees hired under these sections to
                            oversight bodies, including Congress, and in response to this audit. We
                            identified more than 600 instances where HHS erroneously included
                            employees in its data submission to us that were not appointed under
                            sections 209(f) or (g). Some erroneous cases included individuals we
                            later found were hired under appointing authorities other than sections
                            209(f) or (g), including appointing authorities under 42 U.S.C. §§ 247b-8
                            and 210(g). One result of including these cases in error was HHS
                            reported it had made appointments under 209(f) or (g) at the Centers for
                            Medicare and Medicaid Services, which would be prohibited by law. 24 Our
                            analysis found these appointments were made under different authorities.

                            HHS officials acknowledged there were potentially many cases included
                            that were not employees hired under sections 209(f) or (g) as it was
                            sometimes difficult to discern from available data whether employees
                            were hired under sections 209(f) or (g), rather than other authorities under
                            Title 42. According to human resource officials, when attempting to report
                            on the agency’s Title 42 employees, they chose to include questionable
                            cases rather than risk an undercount.



HHS Did Not
Consistently Adhere
to Sections of Its Title
42 Policy and Lacks
Guidance for Some
Authority Provisions

Section 209(f) Hiring and   HHS did not consistently adhere to certain sections of its policy for hiring
Conversions                 and converting employees under section 209(f). We conducted 28 case
                            file reviews of appointments made under existing section 209(f) policy to
                            determine the extent to which HHS practices were consistent with its



                            24
                              HHS may only use sections 209(f) and (g) for appointments within PHS. According to
                            HHS, the Centers for Medicare and Medicaid Services is not an operating division within
                            the PHS.




                            Page 18                                                       GAO-12-692 Human Capital
policy. 25 While not generalizable across the population of Title 42
employees, the case file reviews indicate that HHS appointment practices
are consistent with some aspects of its section 209(f) policy. For example,
all appointees met education requirements for the type of scientific
position being filled. While not an explicit requirement of the policy, HHS
consistently documented the basis for compensation and any recruitment
or retention incentives provided to section 209(f) employees. In some
cases, however, HHS did not consistently adhere to its requirements, as
shown in table 5.




25
     HHS Personnel Instruction 42-1 (August 2004).




Page 19                                              GAO-12-692 Human Capital
Table 5: HHS Compliance with Certain Sections of Its Policy for Hiring and Converting Employees Under Section 209(f) for
Cases Reviewed

Appointment requirement                                                      Observations
Appointments under section 209(f) may only be used to fill                   In 5 of 28 cases, it was unclear or questionable whether the
scientific positions.                                                        individuals were performing scientific duties or needed scientific
                                                                             expertise to perform their responsibilities.
Appointments can only be made after other available personnel                In 23 of 28 cases no documentation was provided to show other
systems—including Title 5, the Senior Biomedical Research                    non-Title 42 recruitment and retention efforts under available
Service, and PHS Commissioned Corps—have failed to yield                     personnel systems and hiring authorities failed to yield the
candidates that possess critical scientific expertise. These                 candidates with needed scientific expertise.
recruitment and retention efforts shall be documented prior to
making an appointment under section 209(f).
Conversions from other pay systems are only to be used in                    HHS conversions met all of the requirements in two of six cases
exceptional circumstances as outlined in this policy. A scientist            we reviewed of individuals converted to Title 42 209(f). In two
may only be converted to [209(f)] from another pay system if he or           other cases, conversions met some but not all of the criteria and
she is appropriately peer-reviewed according to operating division           in the remaining two cases, documentation was not available to
procedures and determined to meet all of the following criteria:             support the basis for conversion.
•    Evidence of recognition as a national or international expert in
     the field.
•    Evidence of original scientific or scholarly contributions of
     major significance in the field.
•    Evidence of leadership in the field equivalent to a full-tenured
     professor in academia.
•    Special knowledge and skills of benefit to the agency.
In order to determine qualifications, supervisors must prepare a             HHS consistently prepared narrative statements describing the
narrative statement fully describing the scientific duties and               position’s duties and responsibilities and the education and
responsibilities and the education and experience to perform                 experience needed to perform those duties.
those duties.
All appointees must meet positive education requirements for the             Individuals hired under section 209(f) met or exceeded
type of scientific position being filled, which must include, at a           educational requirements and had professional experience related
minimum, a bachelor’s degree in a scientific discipline directly             to the duties to be performed.
related to the position.a In addition, appointees must have
professional experience and stature that is commensurate with
the duties of the position being filled.
                                              Source: GAO analysis of HHS documents.
                                              a
                                               For some Title 42 occupations, a doctoral degree or nursing degree may also be required.


                                              In accordance with HHS 2004 Title 42 policy, special consultants may
                                              only be appointed under section 209(f) to fill scientific positions; however,
                                              the policy included no formal criteria and did not define “scientific.” We
                                              reviewed the statement of duties for 28 section 209(f) cases and found in
                                              5 cases that it was unclear the position was scientific. For example,
                                              special consultants hired under section 209(f) included an individual
                                              providing pastoral care services, quality assurance specialists, health
                                              scientist administrators, and data management and technology
                                              administration. In one case, a protocol manager’s duties and



                                              Page 20                                                                 GAO-12-692 Human Capital
responsibilities appeared to require scientific expertise in providing
medical protocol services. It is possible that these and most other
positions noted are scientific in nature or require knowledge of particular
scientific disciplines, but it was not clear from the statement of duties and
other supporting documentation provided by HHS on what basis these
positions were considered scientific.

Additionally, the section 209(f) policy states appointments can only be
made after other available personnel systems, including Title 5 and PHS
Commissioned Corps, have failed to yield candidates that possess critical
scientific expertise. These recruitment and retention efforts, according to
the policy, are to be documented prior to making an appointment under
section 209(f). In only 5 of the 28 section 209(f) case files we reviewed
was there documentation showing HHS considered other personnel
systems before using Title 42. In one case, the memorandum requesting
approval to hire a 209(f) candidate included a template with each of the
section 209(f) policy requirements and how each requirement was met. In
explaining other recruitment efforts, the template showed (1) how the
position was a top-level scientific position and therefore not appropriate
for Title 5 or other authorities, (2) due consideration was given to the PHS
Commissioned Corps, and (3) recruitment incentives would be insufficient
in light of past efforts to recruit individuals with the requisite scientific
experience.

The section 209(f) policy also includes guidance for converting
employees from other pay systems into special consultant positions under
Title 42. The policy states conversions are only to be used in exceptional
circumstances and employees may only be converted to the Title 42
program if they meet all conversion criteria, such as providing leadership
in a field equivalent to a full-tenured professor in academia and
recognition as a national or international expert in the field. In our case
reviews of six conversions to section 209(f), two cases met each of the
requirements for converting employees. In one case where each of the
requirements was documented, NIH officials developed a memorandum
explaining the need to convert a radiologist because radiologists in the
particular specialty are rare, several with similar skill sets recently left
NIH, and the individual will be maintaining equipment critical for multiple
clinical trial protocols.

For other case files we reviewed, documentation provided by HHS did not
support the basis for conversion. In two cases, the stated purpose of
conversion to Title 42 was to retain a clinical research nurse and a
medical technologist. While the justifications showed how both cases


Page 21                                                GAO-12-692 Human Capital
                             provided special knowledge and skills of benefit to the agency, the
                             documents did not provide evidence of recognized national or
                             international expertise in their field, leadership equivalent to a full-tenured
                             professor, or original scientific or scholarly contributions, as required. In
                             the other two cases, we could not determine if conversion requirements
                             were met because HHS could not provide documentation needed.

                             In August 2010, HHS’s Office of Human Resources reviewed the
                             agency’s use of section 209(f) authority and found two issues similar to
                             those in our review. The review found that HHS section 209(f) policy did
                             not define “scientific,” and in the absence of a definition, it appeared the
                             operating divisions adopted an interpretation that was most
                             accommodating to the appointment. The review also found most
                             appointment documentation lacked any information about prior
                             recruitment and retention efforts. Recommendations from the audit report
                             became the basis for a new 209(f) policy, which was issued in February
                             2012. 26 Significant changes to the 209(f) policy include:

                             •    Defines “scientific position” to include positions in which the
                                  incumbent is directly involved in or manages scientific research or
                                  activities, and administrative positions that require the incumbent to
                                  have scientific credentials.
                             •    Requires that the same recruitment plan be used for both Title 5 and
                                  Title 42 to demonstrate that other available personnel systems failed
                                  to yield qualified candidates. Further, the policy also explains the
                                  process and documentation requirements necessary to demonstrate
                                  that other available personnel systems, including Title 5, the Senior
                                  Biomedical Research Service, and PHS Commissioned Corps, have
                                  failed to yield qualified candidates.
                             •    Identifies specific positions and/or categories of positions at NIH that
                                  may be filled through section 209(f) without “exhausting” other
                                  recruitment mechanisms or authorities.

Section 209(g): Appointing   HHS has no agencywide implementing policy for appointing and
and Compensating Fellows     compensating employees hired as fellows under section 209(g), including
                             details about what documents are needed to support the basis for
                             appointments and compensation. We have previously reported that



                             26
                              HHS Human Resources Manual, Instruction 42-1: Appointment of 42 U.S.C. § 209(f)
                             Special Consultants (Feb. 15, 2012).




                             Page 22                                                    GAO-12-692 Human Capital
agencies should have clearly defined, well-documented, transparent, and
consistently applied criteria for appointing and compensating personnel. 27
In lieu of guidance from HHS, the individual operating divisions
established their own policies and guidance for appointing and
compensating fellows under 209(g), each with different levels of detail,
compensation limits, and documentation requirements. NIH has
instructions for appointing fellows as well as guidance for the use of
recruitment and retention incentives. FDA’s Service Fellowship Plan
provides appointment and compensation setting procedures for section
209(g) fellows and caps total compensation at Executive Level IV, with
some exceptions above that cap available for consideration. CDC’s policy
for its 209(g) Fellowship Program provides provisions for all fellows and
general compensation guidance. Top pay for a fellow is set at the
equivalent of the Grade 15, Step 10 pay level.

The lack of an HHS-wide policy poses the risk that compensation
decisions for section 209(g) fellows at HHS may not be made consistently
across operating divisions. Although some guidance exists at the
operating division level for setting compensation targets, in 11 of the 20
case studies we conducted of section 209(g) fellows, we found either no
or insufficient documentation to support the basis for compensation.
Without an agencywide policy, an agency cannot be assured that it is
allocating its resources most appropriately. According to senior human
resource officials at HHS, an agencywide policy is needed and the
agency is developing a policy for appointment and compensating fellows
under 209(g). However, it is not clear that the policy will address
important issues such as documenting the basis for compensation. The
section 209(g) policy was still in development as of May 2012.




27
  GAO, A Model of Strategic Human Capital Management, GAO-02-373SP (Washington,
D.C.: Mar. 15, 2002).




Page 23                                                 GAO-12-692 Human Capital
                    Congress provided EPA with the authority to use 42 U.S.C. § 209 to
EPA Employs a       employ up to 30 persons at any one time through fiscal year 2015. EPA
Limited Number of   has appointed 17 fellows in ORD from 2006 to 2011 under section 209(g).
                    Of the 17 fellows appointed under Title 42, 12 were hired from outside
Title 42 Fellows,   EPA, while the remaining 5 converted from other positions within EPA. 28
Primarily in        Of the 17 appointments, 14 were selected through advertised
Leadership Roles    competition. To date, all 17 fellows remain with EPA and appointments for
                    the three fellows hired in 2006 have been renewed for another 5-year
                    term. 29 See figure 3 for the cumulative onboard Title 42 staff, by new hire
                    or conversion.




                    28
                      Of those hired from outside of EPA, 11 were from private industry or academia, and one
                    from another federal agency.
                    29
                      EPA policy provides that at the conclusion of their term, fellows with Title 5 permanent
                    competitive status based on prior employment retain reinstatement eligibility but have no
                    guarantee of return to a Title 5 position. Fellows who do not have Title 5 competitive
                    status based on prior employment obtain no reinstatement eligibility due to service in a
                    Title 42 position. In this case, if the employee is interested in a Title 5 position following
                    the Title 42 appointment, they are subject to the normal application and competitive
                    selection process.




                    Page 24                                                            GAO-12-692 Human Capital
Figure 3: Cumulative Number of EPA Title 42 Staff, 2006 through 2011




According to EPA officials, the agency has identified mission critical
personnel needs and is actively recruiting to fill the 13 remaining
authorized Title 42 positions. The agency has no plans to use authority
under section 209(f) at this time, but may consider it in the future. Officials
told us EPA would need to develop guidance for implementing section
209(f) before using the authority. 30

According to agency documents, Title 42 fellows at EPA lead scientific
research initiatives, are considered experts in the related scientific
discipline, and some manage or direct a division or office. For example:




30
  In response to a National Academy of Sciences National Research Council report in
2000, EPA modeled its Title 42 program after the NIH program. NIH had already
implemented its program and many structural aspects of the program are similar.




Page 25                                                      GAO-12-692 Human Capital
•    One Title 42 fellow manages and provides oversight for research in an
     integrated systems toxicology research program, was previously an
     Associate Dean at a university where the individual led similar
     research efforts, and leads an ORD division with more than 80 staff.
•    Another leads a research program by developing biological measures
     to assess the impact of environmental exposure on human health and
     serves as Director for the Environmental Public Health Division.
•    The lead scientist for bioinformatics within the National Center for
     Computational Toxicology (NCCT) is a Title 42 fellow, responsible for
     conducting data analysis and developing solutions for data
     management, and serving as senior advisor to the center’s director.
According to EPA officials, Title 42 provides two important tools EPA
needs to achieve its mission. First, EPA reported that Title 42 provides
the flexibility to be competitive in recruiting top experts who are also
sought after by other federal agencies, private industry, and academia.
Prior to using Title 42, EPA had difficulty recruiting and retaining scientists
in certain highly specialized disciplines under regular hiring authorities.
We reported in 2001 that EPA faced significant challenges in recruiting
and maintaining a workforce with mission-critical skills in key technical
areas such as environmental protection, environmental engineering,
toxicology, and ecology. 31 EPA officials told us Title 42 has helped the
agency recruit individuals in cases where, because of the specialization of
expertise needed, authority to set pay over the limits of other hiring
authorities was needed to be competitive in the labor market. As such,
the minimum base salary for Title 42 employees at EPA is equal to the
highest base pay level for employees paid under the General Schedule,
and the maximum base salary is $250,000. 32

EPA officials also stated Title 42 provides the appointment flexibility
needed to align experts with specific skills to changing scientific priorities.
One specific program where EPA cited the importance of using Title 42 in
that way was in the development of the NCCT. There are four Title 42
fellows at NCCT, including its director. The fellows assist in the
development of NCCT initiatives, such as the Computational Toxicology



31
 GAO, Human Capital: Implementing an Effective Workforce Strategy Would Help EPA to
Achieve its Strategic Goals, GAO-01-812 (Washington, D.C.: July 31, 2001).
32
  Grade 15, Step 10 of the General Schedule at EPA’s research facilities where Title 42
employees work include $152,364 at Research Triangle Park in North Carolina and
$153,542 in Cincinnati, Ohio.




Page 26                                                        GAO-12-692 Human Capital
Research Program, a program that is developing alternatives to traditional
animal testing. A 2010 review by the National Academy of Sciences
National Research Council reported “the use of Title 42 appointments to
develop NCCT is an excellent example of how such appointments can be
used to build new capacity and advance the state of science.” 33 EPA
officials stated it is not the agency’s intention to hire a fellow long-term
under Title 42, but rather employ the individual as long as a priority
remains high. For the three fellows hired in 2006, EPA renewed the terms
for another 5-year appointment.

Annual salaries range from approximately $153,000 to $216,000, with an
average salary of about $176,000 and a median salary of about
$171,000. As shown in table 6, 15 of the 17 EPA fellows had salaries
exceeding Executive Level IV.

Table 6: Number of EPA Title 42 Fellows with Salaries in Federal Executive Salary
Levels, 2010

 Executive level                                                    Number of fellows
 At or above Executive Level I ($199,700)                                              3
 Within Executive Levels I and II ($179,700-199,699)                                   3
 Within Executive Levels II and III ($165,300-179,699)                                 4
 Within Executive Levels III and IV ($155,500-165,299)                                 5
 Below Executive Level IV ($155,500)                                                   2
Source: GAO analysis of EPA data.



Of the 12 new hires from outside EPA, 8 earned more in annual pay than
earned in the position previously held, 3 earned less than in their previous
position, and 1 appointee’s salary did not change. Salary changes from
previous positions ranged from a decrease of $85,000 to an increase of
$40,000, not including recruiting incentives. Eight of the 12 new hires
received recruitment incentives ranging from $10,000 to $50,000. EPA
documents indicate that the recruitment incentives were offered to
compete with private industry and to aid in career transition. All five
employees converted from other positions within EPA received a salary
increase, ranging from $6,000 to $15,000. None of the converted
employees received incentive payments.


33
 National Research Council of the National Academy of Sciences, The Use of Title 42
Authority at the U.S. Environmental Protection Agency: A Letter Report (April 2010).




Page 27                                                      GAO-12-692 Human Capital
                         Converted employees generally assumed additional responsibilities as a
                         Title 42 employee. Our case studies included four of the five EPA
                         employees who converted to Title 42. Of the four appointees who came
                         from within EPA, one was promoted from the lead oil research program
                         scientist to the director of the land remediation and pollution division, one
                         moved from being an associate director to a division director within the
                         same national center, one was promoted from a branch chief to a division
                         director, and one remained a director.

                         In December 2010, EPA began a pilot of using market salary data to
                         estimate salaries of what Title 42 candidates could earn in positions
                         outside of government given their education, experience, professional
                         standing, and other factors. EPA used the market salary data to inform
                         salary negotiations for the five fellows appointed since the implementation
                         of the pilot. According to EPA officials, the market salary pilot concludes
                         in December 2012 and its effect will be analyzed at that time.


                         In appointing Title 42 fellows, EPA generally followed appointment
EPA Appointment and      guidance described in its Title 42 Operations Manual. The manual
Compensation             provides guidance for managers, supervisors, and human resources
                         specialists implementing Title 42. In all 10 case files we reviewed,
Practices Were           documents provided by EPA show Title 42 practices were generally
Generally Consistent     consistent with its guidance and requirements. Table 7 shows some
with Its Guidance, but   selected Title 42 appointment requirements and observations from our
                         case reviews.
EPA Could Improve
Resolution of
Potential Conflicts of
Interest




                         Page 28                                               GAO-12-692 Human Capital
Table 7: EPA Appointment and Compensation Practices Were Generally Consistent with Guidance

Appointment guidance                                                          Observations
Fellows appointed under Title 42 will be assigned duties in major or In all 10 cases, EPA assigned the Title 42 employee to
significant areas of scientific inquiry in support of environmental  leadership positions within ORD’s scientific research areas.
protection.
For all Title 42 positions, a doctoral-level degree from an                   In all 10 cases, Title 42 employees had doctoral-level degrees
                                                       a
accredited institution of higher learning is required.                        from accredited institutions of higher learning. Appointees have
                                                                              doctorates in areas such as human genetics, soil microbiology,
                                                                              chemistry, environmental science, biophysical ecology, synthetic
                                                                              organic chemistry, biology, medicine, and anatomy.
Each Title 42 appointee will have a written position description              In all 10 cases, there was a written position description
which describes principal duties.                                             describing the background and need for the position, major
                                                                              duties and responsibilities, and supervisory controls.
Title 42 positions may be recruited through advertised competition,           In 8 of the 10 cases we reviewed, Title 42 positions were
direct-hire without advertised competition, or the conversion of a            advertised. In one case, an employee was hired without
current EPA employee hired under a regular hiring authority with or           advertisement, but was identified through a previous
without advertised competition.                                               announcement for a different position. One case was a converted
                                                                              employee hired without advertised competition.
Title 42 appointees must have conducted outstanding research in a In all 10 cases, EPA provided documentation showing the Title
field of environmental science or engineering that is related to the 42 employee was actively engaged in peer reviewed original
mission of the ORD.                                                  research.
Prior to entry on duty, appointees must provide a job offer                   All new Title 42 employees to the agency provided the required
acceptance letter, completed background investigation form,                   documentation. EPA did not conduct new background
completed public financial disclosure report (SF-278), written                investigations for converted fellows who had a background
acknowledgement of ethics agreement, and proof of appropriate                 investigation upon original employment with the agency.
employment visa, if applicable.
The Assistant Administrator of the Office of Research and                     The ORD Assistant Administrator’s approval was documented in
Development (AA-ORD) or designee will approve or disapprove                   all cases.
recommendations for appointment.
Title 42 appointments will be made initially for a period ranging             EPA appointed all Title 42 employees for a period of 5 years.
from 1 year and 1 day to 5 years. Such an appointment may be
extended for varying periods, not in excess of 5 years for each
period, and requires approval by the AA-ORD or designee upon a
written request by the Title 42 appointee’s immediate supervisor.
                                              Source: GAO analysis of EPA documents.
                                              a
                                               In response to the National Academy of Sciences National Research Council report, EPA has
                                              implemented a two-year pilot to waive the requirement that all Title 42 employees have a doctoral-
                                              level degree. The report noted “[t]hat requirement may exclude many highly qualified scientist and
                                              engineers who do not have such degrees.” The report continued, “EPA should be flexible, taking such
                                              situations into account and making exceptions as appropriate.”




                                              Page 29                                                                GAO-12-692 Human Capital
EPA Could Improve          We conducted 10 case file reviews of EPA Title 42 employees and in 2
Procedures for Resolving   cases we discovered issues related to EPA’s procedures for mitigating
Potential Conflicts of     potential financial conflicts of interest. 34 EPA’s Title 42 employees are
                           subject to the same laws and regulations that govern the ethical conduct
Interest
                           of other federal employees. For example, covered Title 42 employees are
                           required to submit a public financial disclosure report (SF-278) as part of
                           the appointment process and annually thereafter. Title 42 employees are
                           also covered under the criminal conflict of interest law, 18 U.S.C. § 208.
                           Section 208 prohibits a federal employee from participating personally
                           and substantially in a particular matter in which he or she has a personal
                           financial interest. 35 The statute is intended to prevent an employee from
                           allowing personal interests to affect his or her official actions and to
                           protect governmental processes from actual or apparent conflicts of
                           interest. The application of the statute can be waived so that an employee
                           need not divest his or her financial interest or recuse themselves from the
                           particular matter, where the nature and size of the financial interest and
                           the nature of the matter in which the employee would participate are
                           unlikely to affect an employee’s official actions. 36

                           EPA’s Title 42 guidance includes pre-employment ethics clearance
                           procedures for identifying and mitigating potential conflicts of interest prior
                           to appointment. As part of the procedures, an ethics official in EPA’s
                           Office of General Counsel (OGC/Ethics) works with the candidate to
                           ensure that all required information is reported on the disclosure form and
                           to develop an ethics agreement, as necessary, to mitigate or resolve any
                           identified potential conflicts. A job offer may only be extended after
                           OGC/Ethics signs the public financial disclosure report. 37 Although EPA
                           has preappointment ethics clearance procedures as noted above, it does
                           not have postappointment procedures in place to ensure Title 42
                           employees meet ethics requirements to which they have previously


                           34
                             We did not conduct a similar review of ethics compliance at HHS because, unlike EPA,
                           HHS has not included ethics procedures in its guidance specific to appointing and
                           compensating Title 42 employees.
                           35
                             Section 208 also prohibits an employee from participating in a particular matter in which
                           certain persons or organizations, with which he or she is affiliated, have a financial
                           interest.
                           36
                             5 C.F.R. § 2640.101.
                           37
                             The signature of the agency ethics official indicates the filer is in compliance with
                           applicable laws and regulations.




                           Page 30                                                            GAO-12-692 Human Capital
agreed. In two cases we reviewed, employees had potential conflict of
interest situations arise after appointment resulting, in part, from the
agency’s failure to ensure Title 42 employees followed agreed upon
ethics requirements.

•   In one case, EPA general counsel determined stock owned by the
    candidate could be a potential conflict of interest and directed the
    candidate to either recuse himself from certain duties or divest himself
    of the stock as a condition of employment. The candidate agreed to
    divest of the stock and was subsequently hired. A year later, during
    the routine review of the employee’s annual financial disclosure form,
    EPA discovered that the employee still owned the stock. The
    employee was ordered to divest of the stock and this time immediately
    complied. EPA also reviewed the projects for which the employee was
    involved while still owning the stock and determined that the
    employee had not participated in any particular matter which would
    have constituted a conflict of interest. According to EPA, there was
    confusion concerning who, if anyone, was tasked to ensure the
    divestiture occurred.
•   In another case, based on the review of the candidate’s public
    financial disclosure form, EPA and the candidate entered into an
    ethics agreement, which documented ethical constraints that would
    apply to the candidate and to caution the candidate about certain
    assets held. The agreement listed entities in which the individual held
    stock and advised that, as required by 18 U.S.C. § 208, the individual
    should not participate in any particular matter that affected any of the
    listed entities unless the individual first obtained a written waiver from
    EPA/OGC or the value of the asset was low enough to qualify under a
    regulatory de minimis exemption. 38 Despite these efforts, a year later,
    while responding to the employee’s request for additional time to file
    the annual public financial disclosure form, EPA discovered that the
    employee was participating in a matter while holding stock in a
    company (a listed entity in the ethics agreement) that EPA/OGC
    initially believed could be affected by this matter. Concluding that the



38
  Waivers of conflicts of interest are authorized under 18 USC § 208(b)(1) where an
agency determines, in an individual case, that a disqualifying financial interest in a
particular matter is not so substantial as to be deemed likely to affect the integrity of the
employee’s service to the government. 5 C.F.R. § 2640.301. Under the regulatory de
minimis exemption provision of 18 U.S.C. 208(b)(2), if an individual owns less than the
designated amounts, the individual may participate in the matter. Descriptions of the
various exemption thresholds for interests in securities are found at 5 C.F.R. § 2640.202.




Page 31                                                           GAO-12-692 Human Capital
                  employee’s participation was a conflict of interest, EPA/OGC directed
                  the employee, who had been working on the matter for approximately
                  3 days, to immediately stop working on the matter. The employee
                  immediately complied and sold the stock holding in question in order
                  to resume working on the matter. OGC/Ethics made no inquiry into
                  the specific activities the employee engaged in during those 3 days.
                  Almost 2 years later, OGC/Ethics officials now conclude that this
                  company was not sufficiently affected by the matter to present a
                  violation of 18 U.S.C. § 208 in light of facts that subsequently
                  emerged.
              EPA officials acknowledge that beyond these two cases, its efforts to
              identify and mitigate potential conflicts of interest after appointment can
              be improved and have taken steps to improve ethics oversight. For
              example, in order to increase overall awareness of ethics responsibilities,
              EPA reported it provided additional training to a senior ethics official and
              now copies Deputy Ethics Officials – officials responsible for assisting
              employees in being compliant with ethics requirements – when cautionary
              memoranda are issued. EPA also told us it has plans to develop
              mandatory training sessions for ethics officials in its field laboratories and
              centers and implement a process where employees hired under the Title
              42 and other authorities send EPA OGC confirmation of such actions as
              stock divestitures or signed recusals. As details and implementation
              timelines for these plans were not available at the time of our review, it is
              not clear that these plans fully consider and address ethics issues that
              arise after appointment and ensure previously agreed upon ethics
              requirements are followed, as was the issue in the two cases above.


              HHS and EPA have used Title 42 to recruit and retain highly skilled, in-
Conclusions   demand personnel to government service. Although HHS relies on Title
              42 to fill some of its most critical scientific and medical research positions,
              the lack of complete data and guidance may limit the agency’s ability to
              strategically manage the use of the authority. HHS erroneously reported
              appointments made under sections 209(f) and (g) that would have been
              prohibited by law, indicating the agency’s data management practices
              may preclude effective oversight of the program and workforce planning.
              Effective oversight is particularly important in light of HHS’s increasing
              use of Title 42 and the number of employees earning salaries higher than
              most federal employees. Inconsistencies between HHS’s policies and
              practices related to section 209(f) may result in that authority being used
              in ways for which it was not intended. Recent changes to 209(f) policy
              issued by HHS should help the agency more consistently follow



              Page 32                                                GAO-12-692 Human Capital
                      requirements. As appointments have been made under 209(g) without
                      documentation showing the basis for compensation, relying on 209(g)
                      guidance issued only at the operating division level may not be sufficient
                      to ensure appointments and compensation under this authority are
                      appropriate and consistent. HHS has acknowledged the need for
                      agencywide 209(g) guidance, but has not determined if it will include
                      requiring documentation showing the basis for compensation. EPA
                      generally followed its Title 42 policies and has incorporated some
                      modifications to improve its appointment and compensation practices;
                      however, EPA’s current ethics guidance does not sufficiently ensure Title
                      42 employees meet ethics requirements after appointment. EPA
                      acknowledged it could improve its postappointment ethics oversight and
                      reported it has plans to ensure that Title 42 employees send OGC
                      confirmation of stock divestitures and other ethics requirements.
                      However, at the time of our review, EPA had not provided us with
                      implementation plans or timeframes. Although its plans appear to be
                      prudent steps for addressing the specific issues that arose in the cases
                      we reported, it will be important for EPA to implement them as soon as
                      possible to mitigate the risk of future potential conflict of interest issues.


                      To help ensure HHS has the data and guidance necessary to effectively
Recommendations for   oversee and manage its Title 42 authority, we recommend that the
Executive Action      Secretary of HHS take the following three actions:

                      •   Ensure section authority—sections 209(f) or (g)—be consistently
                          entered in appropriate automated personnel systems, such as making
                          section authority a required, drop-down field in its personnel system
                          where this information is initially entered.
                      •   As part of its effort to implement new section 209(f) guidance,
                          systematically document how policy requirements were fulfilled when
                          hiring or converting 209(f) employees. This could include such items
                          as:
                          − the basis for which the position is considered scientific,
                          − recruitment and retention efforts made under other hiring
                               authorities before using Title 42,
                          − a conversion’s recognition as a national or international expert in
                               the field,
                          − a conversion’s original scientific or scholarly contributions of major
                               significance in the field,
                          − a conversion’s leadership in the field equivalent to a full-tenured
                               professor in academia, and




                      Page 33                                                GAO-12-692 Human Capital
                         −  a conversion’s special knowledge and skills of benefit to the
                            agency.
                     •   As part of its ongoing effort to develop agencywide policy for
                         appointing and compensating employees hired under section 209(g),
                         ensure the policy requires and provides guidance for documenting the
                         basis for employee compensation.
                     To help improve enforcement of ethics requirements, we recommend the
                     Administrator of the EPA direct the Designated Agency Ethics Official:

                     •   As part of its efforts to improve postappointment ethics oversight,
                         develop and document a systematic approach for ensuring Title 42
                         employees are compliant with ethics requirements after appointment.
                         Implement, as part of this approach, reported plans to require Title 42
                         employees to provide proof of compliance with ethics agreements to a
                         designated ethics official within a reasonable timeframe after
                         appointment.

                     We provided the Secretary of Health and Human Services and the
Agency Comments      Administrator of the EPA an opportunity to comment on a draft of this
and Our Evaluation   report. The HHS Assistant Secretary for Legislation and EPA’s Acting
                     Assistant Administrator for Research and Development provided written
                     responses and technical comments, which we incorporated as
                     appropriate. The agencies’ comments appear in appendix II and III.

                     In a June 7, 2012, letter responding to a draft of this report, HHS agreed
                     with each of the three recommendations. HHS’s ongoing and proposed
                     actions noted in the response address our concerns and are likely to
                     improve the agency’s management and oversight of its Title 42 authority.

                     HHS agreed with our first recommendation to ensure section authority is
                     consistently entered in appropriate automated personnel systems.
                     Specifically, HHS stated that as it moves forward with the implementation
                     of a new enterprise human resources system, it will explore the possibility
                     of using a drop-down field to enter Title 42 section authority. HHS stated
                     that its Office of Human Resources will continue to work with the
                     Operating Divisions and Staff Divisions to ensure that Title 42 personnel
                     actions are processed in a consistent and accurate manner.

                     HHS also agreed with our two recommendations addressing Title 42
                     policies. HHS stated that, in part due to our findings, it updated its section
                     209(f) policy to address our concern that HHS document how policy
                     requirements were fulfilled when hiring or converting section 209(f)



                     Page 34                                                GAO-12-692 Human Capital
employees. In addition, HHS agreed with our recommendation to develop
agencywide policy for appointing and compensating employees hired
under section 209(g) authority. HHS stated that the section 209(g) policy
will be implemented in the near future.

In a June 6, 2012, letter responding to our draft, EPA disagreed with the
recommendation directed to EPA and our discussion of the second ethics
case. Specifically, EPA requested that we update our discussion to note
that the individual had not yet visited a site related to work on the matter.
EPA stated that since the individual had not yet visited the site, EPA is
not aware of any evidence that the employee personally and substantially
participated in the matter.

We do not believe a change in the discussion of this ethics matter is
warranted. GAO made no independent conclusions as to whether the
individual’s participation during the brief period of time we note
constituted personal and substantial participation in the matter and
whether this was a conflict of interest in violation of 18 U.S.C. § 208.
Rather, our discussion of this case, including whether the individual’s
participation was a conflict of interest, was based exclusively on and
attributed to conclusions made by EPA/OGC, both at the time of the event
and in subsequent interviews conducted for this engagement.

Specifically, documentary evidence at the time of our review supports the
fact that EPA’s concern was the individual’s participation in the matter in
general, and that EPA’s concern was not influenced by the fact that the
individual was not yet on site. As we reported, EPA/OGC directed the
individual to stop working on the matter when it found he owned stock in a
company that could be affected by the matter he was working on (the
individual immediately stopped working on the matter and sold the stock
in order to resume working on this matter.)

EPA disagreed with our statement that it is not clear that EPA plans to
develop an approach to address ethics issues that arise after
appointment and ensure previously agreed upon ethics requirements are
followed. In its comments, EPA noted that on February 17, 2012, it sent
us a letter documenting the steps it has taken and plans to take to
address postappointment ethics issues and ensure previously agreed
upon ethics requirements are followed. Specifically in its February letter,
EPA reported it recently implemented a process in which they now copy
Deputy Ethics Officials when cautionary memoranda are issued to OGE
278 filers. EPA also reports it has plans to implement a process for public
filers, including employees hired under the Title 42 special hiring


Page 35                                               GAO-12-692 Human Capital
authority, to ensure that they send OGC confirmation of stock
divestitures, for example, or signed recusals.

We agree that providing cautionary memoranda to the officials
responsible for assisting the employee in remaining compliant with ethics
requirements is a step that could improve EPA’s postappointment ethics
oversight and added this example to the report accordingly. However,
because EPA did not provide a firm date or timelines for implementing its
reported plan to ensure employees send OGC confirmation of stock
divestitures or signed recusals, we did not revise the finding.

EPA disagreed with the recommendation that it develop and document a
systematic approach for ensuring Title 42 employees are compliant with
ethics requirements after appointment and consider adding steps to the
ethics clearance process that require Title 42 employees to provide proof
of compliance with ethics agreements. EPA asked that we remove the
recommendation or revise it to acknowledge the plans mentioned above
and that EPA continues working towards implementation.

We acknowledge EPA is considering a plan to require proof of
compliance with ethics agreements and, because we believe this is a
prudent and needed step for improved ethics oversight, have revised the
recommendation to reflect EPA’s plans. As the two ethics issues we
reported occurred over two years ago and EPA has acknowledged
improvements in its postappointment ethics oversight are needed, such
plans should be implemented as soon as possible. We maintain that the
recommendation is still necessary to ensure EPA develops detailed plans
and begins moving toward implementation as soon as possible to mitigate
the risk of additional potential conflict of interest issues.


As agreed with your offices, unless you publicly announce the contents of
this report earlier, we plan no further distribution until 30 days from the
report date. At that time, we will send copies of this report to the
appropriate congressional committees. We are also sending copies to the
Secretary of Health and Human Services and the Administrator of the
Environmental Protection Agency. In addition, the report is available at no
charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact
me at (202) 512-2757 or goldenoffr@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on



Page 36                                              GAO-12-692 Human Capital
the last page of this report. GAO staff who made key contributions to this
report are listed in appendix IV.




Robert N. Goldenkoff
Director, Strategic Issues




Page 37                                              GAO-12-692 Human Capital
Appendix I: Objectives, Scope, and
              Appendix I: Objectives, Scope, and
              Methodology



Methodology

              This report examines the extent to which the Department of Health and
              Human Services (HHS) and the Environmental Protection Agency (EPA)
              have (1) used authority under 42 U.S.C. §§ 209(f) and (g) to appoint and
              set pay for employees since January 2006, and (2) followed applicable
              agency policy, guidance, and internal controls for Title 42 appointments
              and compensation.

              To address the first objective, we obtained and analyzed personnel data
              from HHS and EPA to describe Title 42 appointment and compensation
              trends at HHS and EPA since 2006, including the number of Title 42
              employees; the types of occupations and positions held by Title 42
              employees; compensation rates, including the number of Title 42
              employees earning more than certain federal salary levels; the number of
              nonsalary payments (e.g., performance bonuses and retention incentives)
              provided to Title 42 employees and their purpose; and the number of civil
              servants that have been converted to Title 42 appointments and
              compensation changes associated with those conversions. We
              determined 2006 was the most appropriate beginning year for our
              analysis because, according to HHS human resource officials, personnel
              data prior to 2006 was likely not sufficiently reliable for our analysis. Also,
              EPA began using Title 42 in 2006. HHS data presented in this report is
              2006 through the end of 2010, the last year of complete data available;
              and at EPA, 2006 through the end of 2011.

              We conducted a variety of data tests and interviews with agency officials
              to correct and refine HHS Title 42 data and were able to develop a data
              set that was sufficiently reliable for our purposes. We could not, however,
              report on the number of HHS Title 42 employees hired under a particular
              section authority—sections 209(f) or (g)—because section authority is not
              consistently recorded by HHS. For EPA, we performed data testing and
              interviewed agency officials to identify any data gaps or inconsistencies
              with compensation data provided and compared EPA data to information
              found in official agency documents. We determined that EPA’s data were
              sufficiently reliable for the purposes of our report.

              To assess the extent to which HHS and EPA have followed applicable
              policy, guidance, and internal controls, we reviewed the policies and
              guidance at HHS and EPA in order to understand the conditions under
              which Title 42 appointees are to be recruited, appointed, compensated,
              and managed. We determined case file reviews would be the most
              appropriate approach to obtain the information needed to (1) compare
              practices with policy and guidance, and (2) provide illustrations and
              context for data analysis results. We conducted a total of 63 case file


              Page 38                                                GAO-12-692 Human Capital
Appendix I: Objectives, Scope, and
Methodology




reviews out of 1,502 HHS cases within selected strata in two phases. In
the first phase, we conducted 23 case file reviews to address data
reliability concerns. The number of case file reviews in this phase was
proportional to the frequency with which we identified and observed cases
with data characteristics that deviated from our understanding of the
purpose and use of sections 209(f) and (g). In the second phase, we
conducted 40 case file reviews based on a random selection of cases that
had characteristics related to various areas of HHS Title 42 policy and
guidance.

For the HHS case file selection, cases were grouped into strata based on
certain characteristics—such as hired under section 209(f), hired under
section 209(g), newly hired in 2010, converted in 2010, or with aspects of
data inconsistent with our understanding of Title 42’s purpose—and
randomly selected from within those strata. For EPA, we selected 10 of
the 17 Title 42 employees for case file reviews based on a cross section
of (1) labs and centers within EPA to understand if Title 42 was
implemented uniformly across the agency; (2) Title 42 candidate sources
such as the private sector, academia, and conversions to determine if
differences existed in recruitment and pay setting; (3) length of service as
a Title 42 employee to understand the effect of recent appointment and
compensation guidance; and (4) compensation characteristics. We
developed a data collection instrument for both HHS and EPA file reviews
to capture information that was uniform and comparable.

At the conclusion of each phase of our case file reviews, we analyzed the
results and recorded our observations and listed the next steps—such as
interviews with agency officials and further data analysis—needed to
obtain further context for our observations. The results from the case file
reviews and subsequent activities enabled us to understand the results of
our data analyses and provided the basis for findings. We determined the
number of case file reviews was sufficient to identify incidences where
practices were or were not consistent with policies and guidance, but our
findings are not generalizable to the entire population of sections 209(f)
and (g) employees at HHS or EPA.

We conducted this performance audit from May 2011 through July 2012
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.


Page 39                                              GAO-12-692 Human Capital
Appendix II: Comments from the Department
             Appendix II: Comments from the Department
             of Health and Human Services



of Health and Human Services




             Page 40                                     GAO-12-692 Human Capital
Appendix II: Comments from the Department
of Health and Human Services




Page 41                                     GAO-12-692 Human Capital
Appendix II: Comments from the Department
of Health and Human Services




Page 42                                     GAO-12-692 Human Capital
Appendix II: Comments from the Department
of Health and Human Services




Page 43                                     GAO-12-692 Human Capital
Appendix III: Comments from the
             Appendix III: Comments from the
             Environmental Protection Agency



Environmental Protection Agency




             Page 44                           GAO-12-692 Human Capital
Appendix III: Comments from the
Environmental Protection Agency




Page 45                           GAO-12-692 Human Capital
Appendix III: Comments from the
Environmental Protection Agency




Page 46                           GAO-12-692 Human Capital
Appendix IV: GAO Contact and Staff
                  Appendix IV: GAO Contact and Staff
                  Acknowledgments



Acknowledgments

                  Robert N. Goldenkoff, (202) 512-2757 or goldenkoffr@gao.gov
GAO Contact
                  In addition to the individual named above, Trina Lewis, Assistant Director;
Staff             Shea Bader; Carl Barden; Laurel Beedon; Andrew Ching; Sara Daleski;
Acknowledgments   Jeffrey DeMarco; Karin Fangman; Ellen Grady; James Lager; Cynthia
                  Saunders; Jeff Schmerling; and Gregory Wilmoth made major
                  contributions to this report.




(450920)
                  Page 47                                              GAO-12-692 Human Capital
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