oversight

National Oceanic and Atmospheric Administration: Issues on the Civilianization of the Commissioned Corps

Published by the Government Accountability Office on 1997-10-29.

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

                          United States General Accounting Office

GAO                       Testimony
                          Before the Committee on Commerce, Science, and
                          Transportation, U.S. Senate




For Release on Delivery
Expected at
9:30 a.m., EST
                          NATIONAL OCEANIC AND
Wednesday
Oct. 29, 1997
                          ATMOSPHERIC
                          ADMINISTRATION

                          Issues on the Civilianization of
                          the Commissioned Corps

                          Statement by L. Nye Stevens
                          Director, Federal Management and Workforce Issues
                          General Government Division




GAO/T-GGD-98-22
Summary

National Oceanic and Atmospheric
Administration: Issues on the Civilianization
of the Commissioned Corps
                   The National Oceanic and Atmospheric Administration (NOAA) Corps is a
                   uniformed service whose officers carry out a variety of navigational and
                   scientific functions and whose members are covered by a military-like
                   compensation system. In October 1996, GAO issued a report on the results
                   of its limited review of (1) issues concerning the NOAA Corps as a
                   uniformed service with military-like pay, allowances, and benefits and
                   (2) what would be the comparative cost of using civilian employees, rather
                   than uniformed officers, to carry out the NOAA Corps’ functions.

                   GAO   reported the following:

               •   In the 1800s, the Coast and Geodetic Survey—the organization that
                   eventually became NOAA—relied on personnel from the Departments of the
                   Army and Navy to augment its civilian complement that was charged with
                   surveying the then uncharted U.S. shoreline. By the outbreak of World War
                   I, both departments had withdrawn their detailed personnel. However,
                   ships and men qualified to operate them were needed immediately for the
                   war effort. It was then that Congress passed legislation authorizing the
                   president to transfer the Coast and Geodetic Survey’s ships and men to the
                   Navy and War Departments for the duration of the war and to give military
                   rank to those Survey field officers who served in the military. In 1920, the
                   Joint Service Pay Act extended the Navy’s pay, allowances, and retirement
                   system to members of the Survey who held Navy ranks.
               •   NOAA Corps officers receive virtually the same pay and benefits as military
                   personnel. However, the Corps carries out civilian rather than military
                   functions. Although NOAA describes the essential functions of the Corps to
                   be deck officers aboard NOAA ships and a mobile cadre of professionals
                   who can be assigned wherever needed, often in hazardous conditions,
                   civilian employees in other agencies are often assigned to similar duties.
                   Further, the Corps is not subject to the Uniform Code of Military Justice,
                   which underlies military personnel management, and the Department of
                   Defense’s war mobilization plans did not envision a role for the Corps.
               •   Using the estimate of a contractor hired by NOAA to determine the
                   comparative costs of using civilian employees rather than Corps officers to
                   carry out NOAA Corps functions, and GAO’s adjustment for a more complete
                   comparison, GAO estimated that the cost to the government would have
                   been about $661,000 lower from July 1994 through June 1995 if civilian
                   employees had carried out the Corps’ work. GAO’s estimate compared two
                   alternative ways of staffing the existing NOAA Corps functions and did not
                   factor in the costs of transitioning to civilian staff. No transition plan
                   existed at the time of GAO’s review, and the details of such a plan could
                   materially affect such costs.



                   Page 1                                                       GAO/T-GGD-98-22
Statement

National Oceanic and Atmospheric
Administration: Issues on the Civilianization
of the Commissioned Corps
                Madam Chairwoman and Members of the Committee:

                I am pleased to be here today to discuss a report that we completed last
                year on the National Oceanic and Atmospheric Administration’s (NOAA)
                Commissioned Corps.1 The NOAA Corps is a uniformed service whose
                officers carry out a variety of navigational and scientific functions, such as
                charting and oceanographic research, and whose members are covered by
                a military-like compensation system. Our report, prepared at the request of
                Representatives Lamar Smith and John Kasich, was issued in October 1996
                and provided information on (1) issues concerning the NOAA Corps as a
                uniformed service with military-like pay, allowances, and benefits and
                (2) what the costs would be if federal civilian employees carried out the
                Corps’ functions.

                As these objectives suggest, ours was a limited review. Generally, we
                developed information on why the NOAA Corps exists and what the Corps
                officers’ duties are; how the Corps is similar to and different from the
                military services; and what would be the comparative costs of using
                civilian employees versus uniformed officers to carry out the Corps’
                functions. As described later in this statement, our review did not include
                an examination of Corps functions or restructuring or any potential
                savings related thereto. Also, our cost estimate was developed, in part, on
                the basis of a cost comparison done by Arthur Andersen LLP. Like its cost
                estimate, our estimate compared two alternative ways of staffing the
                existing NOAA Corps function and did not factor in the costs of
                transitioning to civilian staffing.


                The organization that became NOAA was established in 1807 and became
Background      known officially as the Coast Survey in 1836. The Coast Survey dispatched
                technical and scientific teams to survey the uncharted U.S. shoreline and
                relied on the Departments of the Army and Navy to supply personnel to
                augment the organization’s civilian employees. After the Civil War, the
                Army withdrew from the Coast Survey’s work. The Navy withdrew during
                the Spanish-American War, leaving the work to be done solely by the
                employees of the newly named Coast and Geodetic Survey.

                At the outbreak of World War I, when ships and men who were qualified to
                operate the ships were needed immediately to augment the military forces,
                Congress passed legislation authorizing the president to: (1) transfer the

                1
                 Federal Personnel: Issues on the Need for NOAA’s Commissioned Corps (GAO/GGD-97-10, Oct. 31,
                1996).



                Page 2                                                                       GAO/T-GGD-98-22
                       Statement
                       National Oceanic and Atmospheric
                       Administration: Issues on the Civilianization
                       of the Commissioned Corps




                       Coast and Geodetic Survey’s ships and men to the Navy and War
                       Departments for the duration of the war and (2) officially to give military
                       rank to Survey field officers when these officers were serving in the Army
                       or Navy. The Joint Service Pay Act of 1920 extended the Navy’s pay,
                       allowances, and retirement system to members of the Coast and Geodetic
                       Survey who held ranks equivalent to Navy officers. In 1965, the Coast and
                       Geodetic Survey became the Environmental Science Services
                       Administration, and, in 1970, it became part of the newly formed NOAA.
                       Currently, NOAA has both civilian employees and CORPS officers.


                       The NOAA Corps carries out civilian functions, rather than military
NOAA Corps’            functions. NOAA Corps officers operate and manage NOAA’s research and
Similarities to and    survey ships that collect the data needed to support fishery management
Differences From the   plans, oceanographic and climate research, and hydrographic surveys.
                       NOAA Corps officers also fly and manage NOAA’s aircraft that are used to
Military Services      penetrate hurricanes for research and to carry out surveys for forecasting
                       floods and mapping changing U.S. shorelines. They are assigned to work in
                       all offices of NOAA.2 According to Corps officials, NOAA Corps officers can
                       expect to serve one-third of their careers in each of the following work
                       categories: (1) sea duty; (2) shore duty that involves responsibilities in
                       marine centers, vessel support, geodetic surveys, or aircraft operations;
                       and (3) shore duty that involves management and technical support
                       throughout NOAA. Although NOAA Corps officers who serve at sea have few
                       civilian employee counterparts at NOAA, other agencies use federal civilian
                       employees or contractors to carry out duties similar to the functions NOAA
                       assigns to the Corps.

                       Corps officials said that the essential functions of the uniformed Corps are
                       to serve as deck officers aboard NOAA ships and to be a mobile cadre of
                       professionals who can be assigned with little notice to any location and
                       function where their services are necessary, often in hazardous or harsh
                       conditions. We found that some Corps assignments are of this nature, but
                       civilian employees in other agencies are often assigned to duties similar to
                       those of the Corps. For example, the Environmental Protection Agency
                       (EPA), the National Transportation Safety Board, and the Federal
                       Emergency Management Agency use civilian employees to respond
                       quickly to disasters and other emergency situations. Moreover, we found
                       that EPA and the Navy used ships operated by civilian employees or

                       2
                        NOAA is composed of five line offices—(1) the National Marine Fisheries Service; (2) the Office of
                       Oceanic and Atmospheric Research; (3) the National Weather Service; (4) the National Ocean Service;
                       and (5) the National Environmental Satellite, Data, and Information Service—and the Office of the
                       Administrator.



                       Page 3                                                                          GAO/T-GGD-98-22
                      Statement
                      National Oceanic and Atmospheric
                      Administration: Issues on the Civilianization
                      of the Commissioned Corps




                      contractors in conducting their oceanic research. Also, NOAA ships have
                      been operated on occasion by Wage Marine (civilian) deck officers, and
                      NOAA officials termed this approach successful.3


                      Although NOAA Corps officers perform civilian functions, they receive
                      virtually the same pay and benefits as members of the military. Corps
                      members’ entitlement to military ranks and military-like compensation,
                      including eligibility for retirement at any age after 20 years of service, was
                      an outgrowth of their temporary service with the armed forces during
                      World Wars I and II. The NOAA Corps has not been incorporated into the
                      armed forces since World War II, and we were told that the Department of
                      Defense’s (DOD) war mobilization plans envisioned no role for the Corps in
                      the future.

                      In a 1984 report,4 DOD provided a detailed discussion of the criteria and
                      principles used to justify the military compensation system. According to
                      this report, the main purpose of the military compensation system is to
                      ensure the readiness and sustainability of the armed forces. The NOAA
                      Corps is not considered an armed service, and Corps officers are not
                      subject to the Uniform Code of Military Justice, which underlies how
                      military personnel are managed.5 Accordingly, NOAA cannot press criminal
                      charges or pass sentence against an officer who disobeys orders, and
                      Corps officers can quit the Corps without legal sanctions.


                      NOAA contracted with Arthur Andersen LLP to determine the comparative
Comparative Cost of   costs of using civilian employees rather than Corps officers to carry out
Using Civilian        the Corps’ functions. The contractor’s report was issued August 30, 1995.6
Employees or Corps    We examined the contractor’s approach and methodology and generally
                      found them to be similar to those we would have used. Thus, other than
Officers              making an adjustment we believed was necessary for a more complete
                      comparison, we accepted the contractor’s estimates of the comparative

                      3
                       A Wage Marine is an employee paid under the prevailing rate pay system in the excepted service who
                      serves as a master or mate on NOAA ships. A prevailing rate employee generally is an individual
                      employed in a recognized skilled mechanical trade or craft. The excepted service consists of civil
                      service positions that are neither part of the competitive service nor the Senior Executive Service.
                      4
                       The Fifth Quadrennial Review of Military Compensation, Department of Defense, January 1984.
                      5
                       Under a 1917 statute, the president can incorporate the NOAA Corps into the military service in the
                      event of a national emergency. Since all military personnel are subject to the Uniform Code of Military
                      Justice, Corps officers, after being incorporated into the military, would be subject to the code. This
                      situation has not occurred since World War II.
                      6
                      National Oceanic and Atmospheric Administration Commissioned Officer Corps: Comparison of
                      NOAA Corps versus Federal Employees, Arthur Andersen LLP, August 30, 1995.



                      Page 4                                                                             GAO/T-GGD-98-22
Statement
National Oceanic and Atmospheric
Administration: Issues on the Civilianization
of the Commissioned Corps




costs of using Corps officers and civilian employees. On the basis of the
contractor’s report and the adjustment that we made, we estimated that
the cost to the government would have been about $661,000 lower during
July 1994 through June 1995, if civilian employees had been used.7

The contractor’s report concluded that if civilians rather than Corps
officers had been used to carry out the Corps’ functions in the year ending
June 30, 1995, costs would have been $573,000 higher. This estimate was
based on actual costs incurred during the year ending June 30, 1995, and
on a Corps strength of 384 officers. However, the report did not include in
its comparison the federal income tax advantage that Corps officers
receive from their housing and subsistence allowances. Like members of
the military, NOAA Corps officers pay no federal income taxes on these
allowances.8 The “cost” to the government arising from this tax advantage
comes in the form of a loss to the U.S. Treasury of the federal income
taxes that otherwise would have been paid if the allowances were taxable.
Federal civilian employees receive no such tax advantage; they must pay
their living expenses from their fully taxable salaries.

According to its report, Arthur Andersen LLP did not include the Corps
members’ tax advantage as a cost of maintaining the Corps because it did
not represent “costs incurred by the Federal Government.” However,
because the tax advantage represents a revenue loss to the government
and is of considerable monetary value to Corps members, we believe that
it should be included in any cost comparison. Since NOAA Corps officers
receive the same base pay and housing and subsistence allowances as
military officers at the same ranks, we used the DOD’s tax advantage
estimates to determine the tax advantage afforded to Corps members. We
estimated that the annual tax advantage associated with the housing and
subsistence allowance amounts used in the Arthur Andersen LLP study
would be $1,234,000 a year. Adjusting the Arthur Andersen LLP study
results by the estimated tax advantage amount results in a total
government cost for the Corps of $30,942,000 for the year, compared with
the estimated $30,281,000 cost of using civilian employees—a difference of
$661,000.




7
 The actual net cost reduction would vary, depending on various factors, including the method by
which any changes are implemented, the applicability of 1994 costs to future years, and the accuracy
of the underlying assumptions concerning Corps and civilian personnel costs.
8
 A major component of military and Corps compensation is termed “Regular Military Compensation.”
This component includes basic pay, nontaxable housing and subsistence allowances, and the tax
advantage accorded to members through the nontaxable allowances.



Page 5                                                                            GAO/T-GGD-98-22
           Statement
           National Oceanic and Atmospheric
           Administration: Issues on the Civilianization
           of the Commissioned Corps




           In presenting our cost comparison figure, I would like to emphasize that
           this was a 1-year cost comparison prepared in 1996. It was based on a
           Corps staff of 384 and used the pay rates and benefit costs that existed at
           the time. Since then, the Corps staff has been reduced to about 270 and
           pay rates and benefit costs also have changed. As a result, it is likely that
           any estimated cost savings based on a comparison of the use of civilian
           employees rather than Corps officers made today would be different.
           Further, if a decision were made to civilianize the NOAA Corps, whether
           there would be any actual cost reductions would depend, in part, on the
           manner in which a transition to civilian employment would be carried out,
           including the period over which the transition would occur and what
           retirement benefits or credits for service would be given. We did not
           estimate transition costs because no transition plan existed and the details
           of such a plan could materially affect such costs. In addition, we did not
           examine whether NOAA Corps functions or the number of persons used to
           accomplish those functions were necessary or could be changed as a
           result of civilianization. Thus, the report did not address issues such as
           whether civilianization of the Corps could present opportunities for
           possible savings through restructuring or consolidating NOAA operations.
           Neither did the report examine the possibility of contracting with private
           companies, rather than using civilian employees, to carry out the Corps’
           current functions.

           This concludes my prepared statement. I would be pleased to answer any
           questions the Committee may have.




(410224)   Page 6                                                        GAO/T-GGD-98-22
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