oversight

Federal Workforce: Selected Sites Cannot Show Fair and Open Competition for Temporary Jobs

Published by the Government Accountability Office on 1990-09-05.

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

                            I-nit tvi States   Gent*ral       Xcc.c)ullt ing Office

i;AO                        Rcy>ort to the Chairman, Subcommittee
                            on Civil Service, Committee on Post
                            Of’f’ice and Civil Service, Ho 11x of
                            Representatives

September   1990
                            FEDERAL
                            WORKFORCE
                            Selected Sites Cannot
                            Show Fair and Open
                            Competition for
                            Temporary Jobs




                     RESTIUCXED--      Not to be released outside the
                     General Accounting OffIce unless specifically
                     approved by the Office of Congressional
                     Relations.

                                      __   -   _.-   -    -    .-




GAO,/‘G<;D-YO- 106
GAO
                   United States
                   General Accounting Office
                   Washington, D.C. 20548

                   General Government   Division

                   B-236993

                   September 5, 1990

                   The Honorable Gerry Sikorski
                   Chairman, Subcommittee on Civil Service
                   Committee on Post Office and
                     Civil Service
                   House of Representatives

                   Dear Mr. Chairman:

                   This report is one in a series of reports responding to your request that
                   we review agencies’ use of personnel authorities delegated to them by
                   the O* ‘ice of Personnel Management (OPM). In January 1985, OPM dele-
                   gated to agencies the authority to expand their appointment of tempo-
                   rary employees and to make these appointments without OPM approval.
                   As agreed, we determined (1) whether selected agencies were complying
                   with merit selection requirements when using the authority and (2)
                   whether these agencies were making temporary appointments for
                   appropriate reasons. Other reports will follow on agencies’ use of dele-
                   gated authorities to hire superior candidates at higher salaries and to
                   appoint experts and consultants.

                   Under the delegated authority, agencies can hire temporary employees
                   for periods of up to 4 years without seeking OPM approval but must
                   renew each appointment annually. Temporary employees do not receive
                   the same benefits as permanent employees. For instance, temporat-)
                   employees do not receive retirement benefits or life insurance, nor are
                   formal procedures required to terminate these employees.

                   OPM  delegated the authority to hire temporary employees to help agen-
                   cies avoid needless permanent appointments for work that is temporary
                   in nature. OPM also gave agencies the latitude to decide what situations
                   warranted temporary appointments. However, regardless of the situa-
                   tion, OPM required agencies to ensure and to be able to demonstrate that
                   all applicants received a fair and competitive chance to be hired-the
                   objective of the federal merit selection system.


                   We reviewed use of the temporary appointment authority at 11 mst alla-
Results in Brief   tions in 6 civilian agencies that made extensive use of the authorIt\-
                   Officials at the 11 installations said they adhered to merit princlplt>\
                   when making temporary appointments. However, they did not kr~l1)
                   records adequate to prove that they did so, and merely saying s() IS III it
                   sufficient. Under the applicable statutes and OPM instructions. ;~#Y\c’I~Y


                   Page 1                           GAO/GGD90-106 Temporary Appointment   \ul   hority
B236993




are required to have a system for ensuring that all qualified and inter-
ested job candidates are fairly and equally considered. Only by main-
taming documentation can agencies demonstrate-whether         to us, to
OPM, or to others-their  compliance with these requirements.

Of 130 randomly selected appointments that we reviewed at the 11
installations, 121 lacked documentation, precluding a determination that
fair and competitive practices were followed in making temporary
appointments. The results from reviewing the 130 appointments are
projectable to the 8,800 temporary appointments made by the 11 instal-
lations. We estimate that about 8,300 of the 8,800 appointments lacked
the documentation required to demonstrate fair and competitive
practices.’

Agency personnel officials gave several reasons for not maintaining
required documentation. For example, several of these officials said
OPM’S documentation requirements are not always clearly stated. Despite
these officials’ concerns about the clarity of documentation require-
ments, the 11 installations either had no written procedures or, if they
had them, they lacked certain elements specified or inferred in OPM’S
guidance- such as the need to demonstrate that job announcements
were sent to state employment offices and OPM. Personnel officials at
two installations told us that they believed a system to ensure compli-
ance with merit selection requirements would serve little purpose
because often more temporary positions were available than applicants.
However, because these officials do not document their merit selection
process, they cannot demonstrate that all applicants were hired and that
all those who were hired were qualified.

The agencies also generally lacked adequate documentation describing
the reasons for temporary appointments. However, on the basis of the
information provided orally by program and personnel officials at the
installations we visited, we determined the reasons for most of the 130
appointments were appropriate. That is, about 76 percent of the 130
appointments were made to fill temporary needs. However, that was not
the case with the remaining 26 percent, which generally were made to
fill permanent needs. Using temporary appointments to fill permanent
positions appeared to be inappropriate and could violate merit princi-
ples, because, whether deliberately or unintentionally, it (1) can dis-
courage qualified applicants interested only in permanent positions


%mpling error ratea are shown in appendix I.



Page 2                                    GAO/GGDS&lOg Temporary Appolntmrnt   Authority
           B-236993




           from competing and (2) can give temporary employees an advantage
           should positions be made permanent.

           OPM'S guidance was not specific enough as to the kinds of situations that
           preclude use of temporary positions. In December 1989, OPM clarified the
           guidance, which now specifies situations in which temporary appoint-
           ments are not to be made and states that temporary appointments
           should be made only when no permanent need for the employee is
           expected. The new guidance should help ensure that temporary appoint-
           ments are made for appropriate reasons.

           For the 11 installations we visited, agency and OPM personnel manage-
           ment evaluations have addressed the use of the temporary appointment
           authority to a limited extent. We believe this limited coverage of the
           temporary appointment authority in these evaluations is another reason
           for the problems we found. However, in 1989, OPM revised its oversight
           approach so that evaluations will include the temporary authority
           through at least fiscal year 1990. We believe that OPM should (1) con-
           tinue to review the use and documentation of the temporary appoint-
           ment authority until adequate agency oversight exists and (2) consider
           revoking the authority for agencies that do not increase oversight and
           ensure compliance.

           In commenting on a draft of this report, the Director of OPM generally
           agreed with our findings. She said that the December 1989 guidance
           would help agencies better understand when use of the temporary
           appointment authority is not appropriate. She also said that additional
           guidance will be issued to clarify what documentation must be main-
           tained to demonstrate adherence to merit principles. She did not address
           OPM'S oversight plans beyond fiscal year 1990.




Approach   were being hired for appropriate reasons, we reviewed 130 random13
           selected temporary appointments made by 11 installations in 6 civilian
           agencies during the 21-month period ending June 30, 1988. We selected
           these 11 installations because they were the most extensive users ()f the
           appointment authority of all civilian installations during that period.
           The installations are part of the Internal Revenue Service, Depart mnt
           of the Treasury; the National Park Service, Department of the Int t’rlc jr:
           the Department of Veterans Affairs; the Census Bureau, Departmt~nt of
           Commerce; the National Institutes of Health, Department of Iltkalt h ;md
           Human Services; and the Department of Agriculture. The results w’


           Page3                            GAO/GGD90-106 Temporary Appointment   4urhority
             B-236993




             obtained from reviewing the 130 appointments can be projected to the
             8,800 temporary appointments the installations made during the 2 l-
             month period.

             Because documentation we reviewed rarely described the need for or
             purpose of the appointments, we had to rely on statements from pro-
             gram and personnel officials at the 11 installations to describe the rea-
             sons for using the temporary appointment authority. We did our review
             between January 1989 and March 1990 using generally accepted gov-
             ernment auditing standards. Comments from OPM on a draft of this
             report are included on pages 14 and 15. Although we did not request
             written comments from the six agencies included in our review, we dis-
             cussed the results of our review with officials of the agencies and con-
             sidered their comments in preparing this report.

             Appendix I identifies the 11 installations included in our review and
             provides more information about our objectives, scope, and
             methodology.


             In January 1985, OPM revised its delegation authority to allow agencies
Background   to make competitive temporary appointments of 1 year or less from
             their own qualified applicant registers at General Schedule (GS) grades
             ~~-12 and below and all Federal Wage System positions. The delegated
             authority also allowed agencies to extend these appointments without
             0PM approval in increments of up to a year, for a total amount of time
             not to exceed 4 years. Agencies must continue to make General Schedule
             temporary appointments above GS-12 from qualified applicant registers
             maintained by OPM; and OPM approval also is required for any temporary
             appointment extension beyond a total of 4 years. Before 1985, the agen-
             cies’ temporary appointment authority was limited to Federal Wage
             System positions and to General Schedule grades GS-7 and below. Also,
             OPM approval was required for extensions totaling more than 1 year.

             As shown in appendix II, competitive, temporary, full-time appoint-
             ments accounted for about 50 percent of all competitive, full-time, fed-
             eral appointments from 1984 through 1989. During this same period,
             competitive, temporary, full-time appointments accounted for about 6.6
             percent of the federal workforce.

             According to OPM’S Federal Personnel Manual (PM), the purpose of dele-
             gating the authority was to help agencies “avoid the needless use of a
             permanent appointment for work that is only temporary in nature.” In


             Page 4                           GAO/GGD9@106 Temporary Appointment   Authority
E-236993




January 1985, OPM described in the FPM some examples of an appro-
priate need for a temporary employee as follows: uncertainty con-
cerning future program funding and work-load levels, impending
reorganizations, and meeting short-term work-load peaks. However, OPM
gave the agencies broad authority in allowing them to use the temporary
appointment authority in situations they deemed appropriate.

Although OPM gave agencies broad authority to make temporary
appointments, it specified other requirements, such as merit hiring pro-
cedures based on fair and open competition, with which the agencies
had to comply. (See app. III for details of the requirements for making
temporary appointments.) In a 1987 letter, OPM stressed the requirement
for following merit principles when making temporary appointments.
FPM letter 3 16-23 reminded agencies of the need to maintain adequate
documentation supporting their temporary appointment selection pro-
cess and advised that OPM could revoke the delegated authority from an
agency for inappropriate use.

Agency personnel officials said that the delegated temporary appoint-
ment authority allowed greater hiring efficiency and flexibility in
meeting short-term work needs. However, agency officials and employee
representatives alike have long expressed concerns about possible
abuses of the authority for reasons such as that temporary employees
are less costly than career employees because they receive fewer bene-
fits and can be terminated without following formal procedures. As we
reported in July 1986, such concerns were expressed after OPM first
expanded the delegated authority.2 For example, employee representa-
tives said that the authority could be abused if agencies were to use
temporaries to meet permanent staffing requirements as a cost-saving
measure. Both agency officials and employee representatives were con-
cerned that the authority could result in productivity losses, increased
training costs, and deterioration of a career workforce.

Some abuses have been reported. Our February 1989 report on 28 judg-
mentally selected temporary appointments identified what we believed
were inappropriate uses of the authority.3 For example, we found merit
violations in the form of an installation limiting its recruiting efforts to
only agency employees and not sending vacancy announcements to cWI

‘Federal Workforce: New Authority to Make and Extend Temporary Appointments (GAO (&;I) tici-
11lBH, July 28,1986).
3Federai Workforce: Temporary Appointments and Extensions in Selected Federal AptBn<IC+1t ;.\C)
GGD 8415. Feb. 23, 1989).



Page 5                                     GAO/GGDQS166 Temporary Appointmenr           Authority
                         B236963




                         and state employment offices. Also, the report noted frequent documen-
                         tation weaknesses that hindered effective reviews of appointments. For
                         example, installations were not documenting reasons for making tempo-
                         rary appointments as required by OPM.

                         Further, our July 1986 and February 1989 reports cited infrequent mon-
                         itoring of the delegated authority by both OPM and agencies. Although
                         both agency and OPM officials said they intended to review agencies’ use
                         of the authority as part of their normal management evaluation pro-
                         grams, our reports cited our concerns about their review plans. We said
                         that agency and OPM personnel management evaluations did not always
                         cover the temporary appointment authority.


                         Officials at the 11 installations included in our review said they had
Compliance With          complied with merit principles when making temporary appointments,
Merit Principles Not     However, because the installations did not maintain sufficient documen-
Demonstrated             tation, we were unable to assess their compliance. Agencies are
                         required-by     statute and OPM instruction-to   have in place a system for
                         ensuring that all qualified and interested job candidates are fairly and
                         equally considered and that applicants are selected solely on the basis of
                         their ability, knowledge, and skills.


What Are Merit System    As cited in the Civil Service Reform Act of 1978, the merit principle gov-
                         erning recruitment requires that applicants be selected for the civil ser-
Principles and Related   vice solely on the basis of relative ability, knowledge, and skills, as
Documentation            determined through fair and open competition. Fair and open competi-
Requirements?            tion has two main components, as follow: (1) publicity about vacancies
                         must be sufficient to attract a large pool of applicants from a broad
                         spectrum of society and (2) every applicant must be fairly and equally
                         considered. Even under the streamlined hiring procedures allowed by
                         OPM'S delegation of appointment authority, agencies must comply with
                         the merit system principle of fair and open competition.

                         For example, agencies are required to notify state job service and OPM
                         offices of vacancies for temporary appointments (5 U.S.C. 3327 and 5
                         C.F.R. 330.102). FPM Chapter 333, which applies to temporary employ-
                         ment, does not specify that documentation be maintained to show when
                         or if these vacancy announcements were sent. However, the chapter
                         requires agencies to maintain records permitting the audit of the selec-
                         tion process, and compliance with the requirements necessitates that
                         such documentation be maintained.


                         Page 6                           GAO/GGLHO-106 Temporary Appointment   A=thrIty
                        B236993




                        FPM  Chapter 333 also instructs agencies to ensure that (1) applications
                        will be accepted on a systematic basis that ensures fair treatment for all
                        candidates, (2) all applications accepted shall be promptly evaluated in
                        accordance with OPM standards, and (3) qualified and available appli-
                        cants will be considered for appointment in established priority order on
                        the basis of veterans’ status. Agencies are to establish an applicant
                        supply system to accomplish this process. OPM also instructs agencies to
                        develop and have available for inspection an up-to-date copy of the
                        detailed procedures followed in maintaining the applicant supply
                        system.

                        FTM Chapter 333 specifies that agencies are to maintain records so that
                        OPM can readily determine whether persons who filed with the agency
                        were given proper consideration. For each appointment, the records
                        must include documentation showing

                    l   who applied and who was available by priority order on the basis of
                        veterans’ status and
                    l   when or if an applicant was determined to be qualified.


Documentation Not       Although the extent to which the 11 installations maintained the
                        required documentation varied widely, none of the 11 consistently main-
Maintained              tained all of the documentation that was required either explicitly or by
                        inference in OPM guidance. We believe that the documentation is needed
                        for judging adherence to merit principles. Therefore, the installations
                        cannot demonstrate their compliance with federal merit system
                        principles.

                        Table 1 shows the documentation deficiencies we found in 121 of the
                        130 temporary appointments reviewed. As shown in the table, the docu-
                        mentation deficiencies can be projected to the 8,800 appointments made
                        by the 11 civilian installations. (Cases do not add to 121 because some
                        had multiple deficiencies.)




                        Page 7                           GAO/GGD90-106 Temporary Appointment   .4uchority
                                                                                                                                -
                                      5236993




Table 1: Merit System Documentation
Deficiencies in 130 Sampled Cases                                               Number of         As percentage of    Projection to
                                      Deficiency                                   cases                 130 cases     8,800 cases
                                      No documentation showing that
                                        OPM and state employment
                                        job service offices were
                                        notified (5 U.S.C. 3327 and 5
                                        C.F.R. 330.102)                                     116                 89%           8,000
                                      No list showing who was
                                        available and considered for
                                        the vacancy by priority group                       62                  48            4,200
                                      No documentation showing the
                                        applicant was determined to
                                        be aualified                                        50                  38            3.500
                                      Note: Sampling error rates are shown in appendix I.

                                       Agency personnel officials gave several reasons for not maintaining
                                       required documentation. For example, agency officials at several instal-
                                       lations said that although they sent vacancy announcements to OPM and
                                       state job service offices, they did not document the actions because
                                       there is no specific requirement to do so. The 11 installations either had
                                       no written procedures of their own for personnel specialists to follow or,
                                       if they had them, their written procedures lacked certain elements speci-
                                       fied or inferred in OPM'S guidance-such as the need to demonstrate that
                                      job announcements were sent to state employment offices and OPM.

                                      A personnel official at the Animal and Plant Health Inspection Service
                                      in Minneapolis, Minnesota, said that applicant supply files were main-
                                      tained in a decentralized manner by many clerks and personnel assist-
                                      ants and that their lack of knowledge about FPM requirements often
                                      resulted in incomplete documentation. The installation had applicant
                                      supply files that were relatively complete for the 10 appointments we
                                      reviewed. Although most of the files included listings of all those consid-
                                      ered for the positions, their priority groups based on veterans’ status,
                                      and documentation showing that vacancy announcements were sent to
                                      OPM and state employment offices, some lacked one or more of these
                                      three elements. According to agency officials, as a result of our review,
                                      the agency created an instruction booklet to be used as a guide by per-
                                      sonnel assistants and clerks who are responsible for the development
                                      and maintenance of applicant supply files.

                                      At the IRS site in Austin, Texas, and at the Veterans Affairs Medical
                                      Center in Boston, Massachusetts, personnel officials said that they did
                                      not maintain applicant supply files and supporting documentation for




                                      Page6                                        GAO/GGD96-106 Temporary Appointment Authority
                     5236993




                     all temporary positions because they often hired every available quali-
                     fied applicant and therefore had more openings than applications. They
                     said they believed that applicant supply files and supporting documen-
                     tation would serve little purpose. However, because they did not docu-
                     ment their merit selection process, they could not demonstrate that all
                     applicants were hired and that all those who were hired were qualified.

                     OPM  officials said that documentation showing (1) that state job service
                     and OPM offices were notified of vacancies, (2) which applicants were
                     determined to be qualified, and (3) who was available in priority order
                     on the basis of veterans’ status are important means of assuring that
                     merit principles are followed. The officials said that if there is confusion
                     over whether the FPM Chapter 333 requirement that agencies maintain
                     records permitting the audit of the selection process also means that the
                     agencies have to document sending vacancy announcements to state and
                     OPM offices, then this should be clarified. The officials also said that OPM
                     is currently updating FPM Chapter 333 and that the update should take
                     into account needed clarifications in documentation requirements.

                     We believe that an agency can demonstrate its compliance with merit
                     system principles only with (1) knowledgeable personnel specialists, ( 2)
                     written agency applicant supply file procedures that address all the
                     required elements, and (3) adequately documented recruitment and
                     appointment efforts. Not only do documentation deficiencies result in
                     the records of personnel activity needed for OPM or agency revitbw btling
                     incomplete or inaccurate, they also could leave an agency at risk it’ the
                     propriety of an appointment were challenged.


Appropriateness of   considerable latitude in determining the appropriateness of temp ~-at-y
Appointments         appointments. Because documentation we reviewed rarely descritxd the
                     need for or purpose of the appointments, we asked program and I)t’r-
                     sonnel officials to cite the reasons for the appointments we revitbwxbti.Of
                     the 130 temporary appointments we reviewed, 97 (75 percent) apptbared
                     to be appropriate in that they filled temporary needs. For instanc.tb. the
                     Bureau of the Census Site in Jeffersonville, Indiana, hired temp)r;trlt~s
                     to fill a short-term need-compiling the results of a special agnc~~lIr I oral
                     economic census. The Animal and Plant Health Inspection Senlc.tb Slttl in
                     Minneapolis, Minnesota, hired temporaries to staff periodic instbc.f,tnti
                     disease control programs.




                      Page 9                           GAO/GGD96-166 Temporary Appointnwnc   \UI hority
    B236993




    However, in 33 cases (25 percent), the appointments appeared to have
    been made inappropriately, usually to fill permanent staffing needs. For
    example, according to some installation officials, they hired individuals
    on a temporary basis to fill permanent positions because they wanted to
    train or test the employees or to judge their suitability for the positions
    before converting them to career appointments. Projecting to the total
    temporary appointments made by the 11 civilian installations in our
    review, we estimated that about 2,400 of the 8,000 appointments were
    inappr0priate.j

    Using temporary appointments to fill permanent positions could violate
    the merit principle of fair and open competition by either deliberately or
    unintentionally restricting competition. For example, we believe a viola-
    tion occurs when an agency uses a temporary appointment as a trial
    period to judge an employee’s performance, and later, when satisfied,
    requests the employee by name from an OPM certificate for a permanent
    appointment to the same position. This practice violates merit require-
    ments of fair and open competition because

l   the temporary appointment disguises the real character of the job, dis-
    couraging qualified applicants interested in a career appointment from
    competing for the position and
l   when a career appointment is made, the temporary employee would be
    given a competitive advantage over other applicants by virtue of his/
    her temporary work experience and training.

    Table 2 summarizes the reasons agency officials gave for making the 33
    appointments we believe to be inappropriate.




    %mpling error rates are shown in appendix I.
                                           5236993




Table 2: Reasons Given by Agencies   for
Temporary Appointments   We Deem                                                                                        Number of
Inappropriate                              Reasons given for temporaries hired into permanent positions:              appointments
                                           To expedite the competitive hinng process                                               9
                                           Used as a tnal period pending successful completion of tramlng, testing,
                                             or a review for suitability                                                               8
                                           To avold a celling on permanent employment levels                                           5
                                           To avoid paying employee benefits                                                           3
                                           Because the employee could not be reached on an OPM certificate                             1
                                           Because the employee was a temporary at another agency before being
                                             transferred to his current agency                                                         1
                                           Reason unknown, but the need for the employee was permanent                             1
                                             Subtotal                                                                             28

                                           For temporaries hired into temporary positions:
                                           Hired to meet a preestablished employment level                                         5
                                           Total                                                                                  33


                                           In December 1989, OPM officials recognized that agencies were using the
                                           delegated authority for inappropriate reasons and revised their gui-
                                           dance. This revised guidance expressly prohibited using the delegated
                                           authority (1) as a trial period, (2) to avoid ceilings on permanent
                                           employment levels, (3) to avoid the cost of employee benefits, or (4) to
                                           circumvent the competitive examining process.

                                           In addition, the FPM revision stated that the use of the authority is
                                           appropriate “. . . only when there is a reason to expect that there will be
                                           no permanent need for the employee. The use of temporary limited
                                           appointments for other reasons is not authorized.” This statement would
                                           prohibit agencies from using the authority to hire temporary employees
                                           for the sole purpose of expediting the hiring process. However, OPMalso
                                           developed a special needs appointment authority allowing agencies to
                                           expedite the hiring of employees for up to 30 days, pending completion
                                           of the competitive examining process.


                                           OPM  is required by the Civil Service Reform Act of 1978 to review
Little Monitoring of                       agency compliance with merit system principles and civil service laws.
Agencies’ Use of the                       In turn, OPM requires agencies to make internal reviews of the authori-
Authority                                  ties they have been delegated. The agencies we reviewed generally Lvere
                                           not making such reviews for the temporary appointment authorlt y.
                                           some had no programs to do so. In addition, OPM’S monitoring ot’ r ht) use
                                           of this delegated authority at the installations we visited was limit 14.



                                           Page 11                                  GAO/GGDfKk106 Temporary Appointmrnt    \uthority
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The 11 installations we reviewed were part of six agencies. To determine
if these agencies evaluated the installations’ use of the temporary
appointment authority, we sought evaluation studies for the period
from 1984 to 1989 from the agencies’ national offices and the installa-
tions. We found that the use of the authority had been evaluated once at
four of the installations representing three of the agencies.

Among the problems found by internal reviewers at the four installa-
tions were (1) no documentation of priority groups for those considered
for appointments, (2) poorly constructed applicant supply files, and (3)
no documentation of qualification determinations. We found some of the
same problems at the installations after the internal evaluations were
made.

While use of the temporary authority provided agencies with benefits,
one of the internal evaluation reports described the drawbacks of inap-
propriate use of the authority:

“Compounding this situation [high employee turnover] is the commonly accepted
temporary hiring practice at the center. Specifically, several of the service chiefs
have adopted the practice of hiring temporary employees under temporary appoint-
ments for permanent positions. They feel that not only are temporaries easier to
hire and fire than permanent, but that hiring temporaries also extends the proba-
tionary period. However, these managers also believe that this practice has no nega-
tive consequences in terms of recruiting and retaining quality staff because, as one
chief put it, ‘the employees being hired are not interested in benefits such as health
insurance.’

There appears to be little concern by these managers that in using this temporary
hiring practice (1) they are compromising the spirit and intent of a career merit
system; (2) they are causing a great deal of extra work for the Personnel Office
which must process employees twice or even more often; and (3) they are adding to
the recruitment and retention difficulties in those cases where an applicant or tem-
porary employee does want the ‘security’ and benefits of a permanent
appointment.”

As of December 1989, in addition to the Departments of Veterans
Affairs, Health and Human Services, and Commerce, which all had eval-
uation programs in place, two more of the six agencies-the Depart-
ments of the Interior and Agriculture-were    developing such programs.
Officials from each of these two agencies said their programs would
include evaluations of the temporary appointment authority. According
to the officials, the programs should be in operation by fiscal year 199 1.
              5236993




              The remaining agency-the Department of the Treasury-had        an evalu-
              ation program in place, but the program did not require review of tem-
              porary appointments. A Treasury official said that temporary
              appointments were sometimes reviewed at headquarters but not in
              regional offices due to a lack of staff.

              We looked at whether OPM had evaluated the installations’ use of the
              temporary appointment authority. We found that OPM made 15 per-
              sonnel management evaluations at the 11 installations during the 1984
              to 1988 period. However, the temporary appointment authority was not
              always part of those evaluations because reviews of delegated authori-
              ties were outside the scope of these evaluations. OPM reviewed tempo-
              rary appointment authority at only two of the installations. No
              deficiencies in the temporary appointment process were cited.

              OPM revised its evaluation approach in October 1988 to specifically
              require a review of agencies’ compliance with delegated appointment
              authorities for fiscal year 1989. Under the revised approach, OPM is to
              annually select specific issues to be reviewed at about 20 percent of all
              installations with over 500 staff and provide evaluators with guidelines
              to follow in making the evaluations. OPM officials said they will require
              evaluators to review delegated authorities again in fiscal year 1990.
              Under the new approach, there is no assurance that temporary appoint-
              ments will be reviewed on a regular basis because issues selected for
              review may change from one year to the next, depending on what CIPM
              officials identify as problems needing study. Because agency evalua-
              tions-a chief source from which OPM discovers problems needing
              study- are not always done, OPM may find it difficult to determine
              whether the temporary appointment authority should be included in
              future governmentwide reviews.


              From a practical perspective, we endorse the delegation of appointment
Conclusions   authority to agencies to meet their staffing needs. While most of the
              temporary appointments we reviewed were made for appropriate rea-
              sons, we believe 25 percent were not. However, OPM'S revised guidance
              should help agencies better understand when the use of temporary
              appointments is not appropriate.

              Agencies must gain greater appreciation for the need to comply with the
              documentation requirements involving their use of the temporary
              appointment authority. Most of the appointments we reviewed were not
              fully documented and lacked multiple pieces of required documentation.


              Pye   1s                         6AO/GGlMWoITcqauy      Appointment   Amtbodty
                                                                                                  -
                    Ix236993




                    Agency personnel officials said one reason for the missing documenta-
                    tion was unclear guidance. For example, officials said they did not docu-
                    ment sending vacancy announcements to OPM and state job service
                    offices because there is no specific requirement to do so. Because FPM
                    chapter 333 requires documentation of the selection process to permit
                    auditing, to avoid further confusion, OPM needs to clearly state that doc-
                    umentation of vacancy announcement distribution is required.

                    Documentation requirements should not be viewed as bureaucratic
                    “make work.” Inadequate documentation precludes an assessment of
                    whether all qualified applicants received a fair and competitive chance
                    for employment- which is a merit principle stipulated by law. Without
                    adequate documentation, the potential exists for agencies to intention-
                    ally or unintentionally make appointments on a basis other than merit.

                    The oversight process can uncover inadequate documentation and high-
                    light the importance of adequate documentation. Unfortunately, not all
                    of the agencies we reviewed had, or plan to have, oversight programs to
                    review their personnel management actions, including use of the tempo-
                    rary appointment authority. The lack of agency-based evaluations
                    places a greater burden on OPM to ensure that the appointment delega-
                    tions it makes to agencies are being carried out properly. We believe that
                    OPM should oversee use of the delegated authority on a regular basis
                    until adequate agency oversight exists. Further, if, over time, OPM finds
                    that agencies do not increase oversight and ensure compliance, OPM
                    should consider revoking the authority from the noncomplying agencies.


                    To better ensure that agencies comply with temporary appointment
Recommendations     statutes and OPM instructions, we recommend that the Director of OPM

                  . revise F'PM instructions to specify that agencies must maintain documen-
                    tation to show that vacancy announcements were sent to OPM and state
                    job service offices and
                  . continue to review, on a regular basis, agencies’ use of and documenta-
                     tion for the temporary appointment authority and consider revoking the
                     authority from noncomplying agencies.



Agency Comments     of OPM said that she shares our concern that in a substantial number of
                    cases agencies failed to maintain sufficient documentation of compliance
                    with statutory and regulatory requirements. She said that additional


                    Page 14                          GAO/GGtMO-106 Temporary Appointment   .4urhority
5236993




guidance will be issued to make clear exactly what agencies must do
when making temporary appointments and exactly what records of
these actions must be maintained. She also said that the December 1989
guidance should help agencies better understand when use of the tempo-
rary appointment authority is not appropriate.

The Director disagreed with our draft report’s characterization of OPM’S
personnel management evaluations as infrequent, although she
acknowledged that such evaluations have not previously included uni-
form case sampling and uniform reporting requirements for the review
of temporary appointments. To address the Director’s concern, we
revised our language to more clearly stress our point that the evalua-
tions’ coverage of temporary appointments at the installations we vis-
ited was limited. In addition, the Director said that OPM’S evaluation
approach was revised for fiscal year 1989 and included a specific review
of temporary appointments in fiscal years 1989 and 1990. Further, the
Director said that OPM’S findings in fiscal year 1989 were largely consis-
tent with our findings, but her comments did not address OPM’S oversight
plans beyond fiscal year 1990.


As arranged with the Subcommittee, unless you publicly announce its
contents earlier, we plan no further distribution of this report until 30
days from its issue date. At that time, we will provide copies of this
report to OPM, to the agencies where we did our work, and to others upon
request.

The major contributors to this report are listed in appendix V. If you
have any questions, please call me on 275-5074.

Sincerely yours,




Bernard L. Ungar
Director, Federal Human Resource
  Management Issues




Page 15                          GAO/GGD9@106 Temporary Appointment   Authority
                                  --
Contents


Letter
Appendix I                             18
Objectives, Scope,and
Methodology
Appendix II
Federal Nonpostal
Competitive Full-Time
Temporary and
Permanent
Appointments,
Calendar Years 1984
1989
Appendix III
Requirements for
Making Temporary
Appointments for the
Period Covered by Our
Review
Appendix IV                            23
Comments From the
Office of Personnel
Management
Appendix V                             26
Major Contributors to
This Report



                        P8ge 16
                                                                  -
         Contents




Tables   Table 1:Merit System Documentation Deficiencies in 130       8
             Sampled Cases
         Table 2: Reasons Given by Agencies for Temporary             11
             Appointments We Deem Inappropriate
         Table I. 1: Installations Included in Our Review,            19
             Temporary Appointments Made, and Appointments
             Sampled
         Table 1.2: Sampling Errors for Population Estimates          19
             Shown in the Text




         Abbreviations

                    Code of Federal Regulations
                    Federal Personnel Manual
                    General schedule
                    Office of Personnel Management
                    Standard Fom
Appendix I

Objectives, Scope,and Methodology


               At the request of the Chairman, Subcommittee on Civil Service, House
               Committee on Post Office and Civil Service, we reviewed the use of the
               temporary hiring authority that was delegated to agencies by OPM in
               January 1985. Our objectives were to determine (1) whether selected
               agencies’ use of the temporary appointment authority complied with
               merit selection requirements and (2) whether those agencies were
               making temporary appointments for appropriate reasons.

               We reviewed temporary appointments made by the 11 installations that
               made the most use of the authority during the 21-month period ending
               June 30, 1988. The installations represented six civilian agencies. As
               requested, we excluded the Department of Defense and its agencies and
               services. In selecting the 11 installations, we obtained statistics on tem-
               porary appointments from OPM'S Central Personnel Data File but did not
               attempt to verify the accuracy of the information contained in the file.
               During the 21-month period ending June 30, 1988,873 installations
               made 51,981 temporary appointments from their own registers. The 11
               installations that made the most use of the authority made 8,800 tempo-
               rary appointments, or 16.9 percent of all appointments made in the 21-
               month period.

               We randomly selected a total of 130 appointments from those made by
               the 11 installations. Our selection was made by randomly selecting (1)
               15 appointments from each of the four installations that used the
               authority the most and (2) 10 appointments each from the remaining
               seven installations. The installations, the total appointments made in the
               21-month period, and the appointments we selected are shown in table
               I. 1. We designed our sample selection to represent the 8,800 appoint-
               ments made by the 11 installations during the period covered by our
               review with a confidence level of 96 percent and a sampling error within
               plus or minus 10 percent. The sampling errors for the percentages
               shown in the report are all less than 10 percent. The sampling errors for
               population estimates are shown in table 1.2.




               Page 18                          GAO/GGD9@106 Temporary Appointment   Authority
                                                 Appendix I
                                                 Objectives, Scope, and Methodology




Table 1.1: Installations Included in Our
Review, Temporary Appointments       Made,                                                                                  Appointments
and Appointments        Sampled                  Installation                                                           Made             Samoled
                                                 Veterans Affarrs Me&al     Center, Boston, Massachusetts               1,328                   15
                                                 Internal Revenue Servrce, Richmond. Virginra                           1,182                   15
                                                 Bureau of the Census, Jeffersonville, Indiana                          1,054                   15
                                                 National Institutes of Health, Bethesda, Maryland                        902                   15
                                                 National Park Service, San Francisco, California                         715                   10
                                                 Internal Revenue Service, Austin, Texas                                  663                   10
                                                 National Park Service, Boston, Massachusetts                             656                   10
                                                 Veterans Affairs Medical Center, Northport, New York                     625                   10
                                                 National Park Service, Washington, DC                                    577                   10
                                                 Internal Revenue Service, Holtsville, New York                           548                   10
                                                 U.S. Department of Agriculture, Animal and Plant Health
                                                    Inspection Servtce, Minneapolis, Minnesota                            548                    10
                                                 Totals                                                                 8.800                   130




Table 1.2: Sampling   Errors for Population   Estimates   Shown in the Text
                                                                                                          Representation    in the population of
Page number in                                                                                                         8,800 cases”
report                    Deficiency                                                                        Estimate               Sampling error
2                         Lacked documentation to demonstrate fair and competitive practices                     8,300                       r 300
                                                                                                                                                 -~
8                         No documentation showing OPM and state employment job service
                          offices were notified                                                                 8,000                       *   300
8                         No list showing who was available and considered by priority group                    4,200                       f   500
8                         No documentation showing the applicant was determined qualified                       3,500            -~         r   600
10                        Appointment made for inappropriate reasons                                            2,400                       -   500
                                                 aEstimates and errors are rounded to the nearest   100




                                                 Page 19
Appendix II

Federal Nonpostal Competitive FulLTime
Temporary and Permanent Appointments,
Calendar Years 19841989

White-collar                                                               1984        1985          1986         1987         1988          1989
Number of temporary appointments                                         70,770       78,490        55,723       82,033       61 745        49,461
Number of permanent appointments                                         73,814       83,086       69,552        93,551       08,887        72,053
Total white-collar appointments
                    I I                                                 144,584      161,576      125,275       175,584      150,632       121.514
Temporary appointments as a percent of white-collar
  appointments                                                              489          486          44.5         467          41    0        407
Blue-collar
Number of temporary apporntments                                         32,507       33,377        23,903       34,370       20849         19.826
Number of permanent appointments                                          8,339         9,870        6,110        7,131        7,828          8,567
Total blue-collar apporntments                                           40,846       43,247        30,013       41,501       28.677        28,393
Temoorarv aboointments as a oercent of blue-collar apporntments             79.6         77 2         79.6         828           72 7         69 8
All employees
Number of temporary appointments                                        103,277      111,867        79,626      116,403       82,594        69,287
Number of permanent appointments                                         82,153       92,956        75,662      100,682       96,715        80,620
Total appointments                                                      185,430      204,823       155,288      217,085      179.309       149,907
Temporarv appointments   as a percent of total apporntments                 55.7         54.6         51.3         53.6         46 1           46 2

                                                Note The most recent data avariable for calendar year 1989 was through September 1989
                                                Source. Offlce of Management and Budget Turnover Reports prepared by OPM.




                                                Page 20                                     GAO/GGD9@106 Temporary Appointment            \u I hority
Appendix III

Requirements for Making Temporary
Appointments for the Period Covered by
Our Review
                   OPMis responsible for establishing policies and guidelines on hiring fed-
                   eral employees.

                   With few exceptions, appointments to positions in the federal govern-
                   ment are to be made competitively from registers of qualified applicants
                   who have been evaluated by OPMand ranked on the basis of their rat-
                   ings. However, agencies may make appointments from their own regis-
                   ters if OPMhas delegated the authority to the agencies to do so. OPMhas
                   made such a delegation to agencies for the hiring of temporary
                   employees.

                   As specified in 5 CFR316.402 (a), “[an] agency may make and extend a
                   temporary limited appointment only with specific authorization from
                   [OPM].. 9" In January 1985, OPM provided authorization to agencies to
                   make temporary appointments from agency registers. FPMletter 3 16-2 1
                   delegated to agencies the authority to make appointments for up to 1
                   year for all Federal Wage System and General Schedule (GS) positions up
                   to grade ~~-12. Additionally, the letter authorized agencies to extend
                   temporary appointments in increments of 1 year or less and up to a total
                   of 4 years without prior OPMapproval. When exercising the authority,
                   agencies must adhere to competitive and merit selection practices. Merit
                   selection practices require that agencies give fair and equal considera-
                   tion to ail applicants, applying applicable veterans’ preference rules.

                   The FPMletter lists examples of appropriate uses of the authority as
                   follows:

               . filling any vacancies in commercial activities that are being considered
                 for contracting out (under Office of Management and Budget Circular A-
                 761,
               l staffing continuing positions when future funding and work-load levels
                 are uncertain or when it is anticipated that funding levels will be
                 reduced or that the activity will be reorganized, and
               . filling permanent positions temporarily in order to save them for even-
                 tual incumbency by career or career-conditional employees expected to
                 be displaced from other activities or organizations.

                   The letter further states that in “these and other situations which the
                   agency determines to be appropriate, temporary limited appointments
                   may be made, and extended without prior approval from OPM ."

                   OPMfurther specifies that agencies are to document the reason for a rem-
                   porary appointment on the appointment’s Notification of Personnel


                   Page 21                          GAO/GGD-90-106 Temporary Appointment   Authority
    Requirements for Making Temporary
    Appointments for the Period Covered by
    Our Review




    Action, Standard Form (SF) 50. The requirement is contained in FPMSup-
    plement 296-33.

    FPMchapter 333 requires agencies to “comply with the merit principles
    of open competition, fair evaluation of qualifications, and selection
    solely on the basis of merit and fitness” when making temporary
    appointments outside of OPMregisters. The chapter also requires that
    “certain operations must be performed and records maintained so that
    the agencies may readily operate an applicant supply system that
    observes the principles of the merit system and so that [OPM]can readily
    determine whether persons who filed with the agency were given proper
    consideration.” Information to be maintained includes

. title of position for which application is made,
l priority group (based on veterans’ status) assigned each applicant and
  available applicants in higher priority groups,
. date application received,
. date applicant was determined qualified, and
. selection date.

    In addition to the ITM requirements, 5 U.S.C. 3327 and 5 C.F.R. 330.102
    require agencies to notify OPMand state job service offices of openings
    before they can make temporary appointments from their own registers.




     Page 22                                 GAO/GGIHO-106 Temporary Appointrnrrrt   \UI hority
Appendix IV

Comments From the Office of
PersonnelManagement


                                                          UNITED        STATES
                                            OFFICE     OF PCRBONNEL               MANAGEMENT

                                                       WASH,P(OTOP(.       D.C.    204   1I




                Mr.   Richard   L. Foge 1
                Assistant     Comptroller General
                U.S. General Accounting     Office
                Washington,     DC 20548
                Dear Mr.    Fogel:
                We appreciate     the opportunity to comment on the draft     GAO report
                entitled:     Federal  Workforce:   Selected    Installations Cannot
                Demonstrate    Fair and Open Competition     for Temporary Jobs.
                Our specific         comments          on the      draft           report          are as follows:
                Appropriateness         of Temporary               Appointments
                One focus of the review was the appropriateness               of the temporary
Now on p. 15.   appointments     made.    As the draft   report    indicates    on page 18,
                however,    OPM recently    issued guidance     on non-permanent     employment
                that "should    help agencies     better   understand      when use of
                temporary    appointments     is not appropriate."
                New OPM guidance             advises  agencies                    that        it   would     be inappropriate
                to use temporary             employment   to:
                      0        Avoid the             cost of employee benefits                             or ceilings     on
                               permanent             employment levels:
                      0        Try    out      employees        prior             to permanent              appointment:
                      0        Circumvent     the competitive     examining   process by
                               appointing     an individual     on a temporary    basis because
                               the individual       is not within    reach for permanent
                               appointment;      or
                      0        Refill positions               which,    over                  the preceding    4 years,
                               have been filled               continuously                      on a temporary   basis.




                      Page23
                                         Appendix IV
                                         Comments FromtheOffice of
                                         Personnel Management




                                                                         -2-

                             Documentation
                             We share your    concern       that in a substantial          number of cases
                             reviewed,   agencies      failed     to maintain   sufficient       documentation
                             showing compliance        with statutory       and regulatory       requirements.
                             To remedy this     situation,       we plan to issue additional            guidance  in
                             the Federal   Personnel        Manual to make clear exactly            what agencies
                             must   do when making temporary          appointments      outside     the register
                             and exactly   what records         of these actions       must be maintained.

                             Frequency      of OPM Personnel         Management   Evaluations
                             The GAO report    also covered       the frequency of OPM personnel
                             management evaluations         (PMEs) on temporary  employment.     The
                             report   says that "Agency and OPM personnel        management evaluations
                             have been infrequent        and did not always cover the temporary
Now on pp. 3, 6, and 11-13   appointment   authority..."       (p. 4; see also pp. 7-8, 15, and 17).
                             "Infrequent"      does not accurately         describe     OPFl's installation
                             level    PME effort,    especially      under the Installation           Assessment
                             Visit    (IAV) program during        1984-88.       This agency conducted        IAVs
                             at 3,365 installations         during     that period,      an average of 673 a
                             year.     And, as your report        indicates,      "OPM made 15 personnel
                             management evaluations         at the 11 installations           [in the GAO
Now on p. 13                 sample] during       the 1984 to 1988 period"           (p. 17).
                             It   is true   that OPM's IAV agenda did not include              uniform   case
                             sampling     and reporting    requirements      for the review of temporary
                             appointments:       rather, the evaluator       rated installation        compliance
                             on a 4-point      scale against     the following     standard     on the IAV
                             Staffing     Checklist:
                                   "Procedures  from FPM Chapters         213,       302,    316, and 333 are
                                   used for excepted/outside-the-register                   appointments."
                                   (This item covers temporary         appointments      outside  the
                                   register    together   with excepted      appointments.)
                                   Evaluators     based ratings    on installation       policy  and
                                   procedures     and, time permitting,        a review of placement
                                   records    such as the applicant      supply     file    (OPM
                                   Operations     Letter  273-1013).
                             Thus, during     the IAV cycle     from 1984 to 1988, OPM covered
                             temporary    appointments    largely   from a procedural     standpoint.     AS
                             your report    observes,    however,   OPM adopted a new approach
                             beginning    in FY 1989: both FY 19R9 and 1990 reviews           include  ;1
                             governmentwide      review of temporary    appointments.      These reviews
                             entailed   examination     of a sample of temporary      cases from




                                         Page 24                               GAO/GGD90-106Temporary Appointmrnt .\uthority
-
             Appendix lV
             CommentsFrom the Office of
             Personnel Management




                                              -3-
    a regulatory   perspective     in addition  to a review of procedural
    requirements.     Our findings    in FY 1989 are Largely  consistent
    with your findings.
    OPM also reviews      temporary    appointments   in Agency-Level   Reviews
    and Targeted   Installation       Reviews,   when called  for by the review
    agenda.
    Thank you for      giving   us the    opportunity        to comment on the     draft
    report.
                                          Sincerely,



                                          Constance       Berry   Newman
                                          Director




             Page 25                                   GAO/GGD9@106Temporary Appointment Authority
Appendix V                                                                                          -
Major Contributors to This Report


General Government        Management Issues
Division, Washington,   Thomas Davies, Assignment Manager
D-C. ’            -     ~;~;~n,?,;;;l;$&ator
                        Don D. Allison, iechnical Advisor



Denver Regional         Mary A. Crenshaw, Site Senior
Office                  Miguel A. Lqjan, Evaluator




 (966368)                Page 26                            GAO/GGIM@lOtI Temporary Appolntmrnt ~~ulhorlty