Human Capital:

Agencies Are Using Buyouts and Early Outs with Increasing Frequency to Help Reshape Their Workforces

GAO-06-324: Published: Mar 31, 2006. Publicly Released: Mar 31, 2006.

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Under the Chief Human Capital Officers (CHCO) Act of 2002, an agency may request authority from the Office of Personnel Management (OPM) to offer employees voluntary separation incentive payments (buyouts) and voluntary early retirement (early outs) to help reshape its workforce. GAO was asked to identify (1) how many agencies have been granted authority to offer buyouts and early outs and how often agencies used them, (2) how agencies view OPM's role in facilitating the use of these tools, (3) how agencies have used practices associated with effective use of the tools, and (4) what challenges agencies identified, if any, to continued effective use. To respond, GAO reviewed the practices of the Departments of Agriculture, Commerce, Energy, Health and Human Services, Interior, and the Treasury because they were among the most frequent users of these authorities.

The total number of agencies using buyouts and early outs to reshape their workforces has significantly increased from 28 to 51 during fiscal years 2003 through 2005, and the number of programs agencies have offered over the past 3 years has also significantly increased. During this timeframe, at least 22,600 employees have separated from federal service under these authorities. Officials at all six agencies GAO reviewed believe that OPM's mandatory review of and feedback on their plans for using buyouts and early outs has improved implementation. However, nearly all of the agencies said they believe the review at times can be achieved more quickly and should be streamlined. OPM on average took 36 days to review the 28 randomly selected programs GAO assessed at the six agencies. OPM is taking steps to reduce its overall average review time including establishing more stringent timeframes for review and reducing the number of reviewers. The six agencies also reported using almost all of the practices GAO identified as associated with the effective use of buyouts and early outs, and that these practices resulted in better-planned programs. Agencies were not, however, using one practice that involves evaluating the longer-term effectiveness of the buyout and early-out authorities for reshaping their future workforces. Officials at the six agencies suggested that information on how some agencies used effective practices in ways that were particularly successful or instructive in reshaping their workforces could help them improve program results. Agency officials responsible for use of these authorities from the six agencies agreed that certain reforms would help them address some of the challenges they face in implementing their programs. These include (1) increasing the current dollar amount agencies can pay under buyouts to make the programs more attractive to employees and increase the acceptance rate and (2) allowing agencies to make minor changes to buyout and early-out plans after OPM approval. OPM is in the best position to assess these and other possible reforms and ways to achieve them.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To help ensure that agencies can take full advantage of the authorities to use buyouts and early outs to reshape their workforces, the Director of OPM, in conjunction with the CHCO Council, should share additional information with agencies on examples of how agencies have used practices associated with effective use of buyout and early-out programs to support their programs and achieve successful results. In addition, OPM could support the improvement of approval cycle time and the effectiveness of the programs by facilitating information sharing among agencies, such as holding forums and training sessions on the use of the authorities for agencies with less-experienced staff.

    Agency Affected: Office of Personnel Management

    Status: Closed - Implemented

    Comments: OPM streamlined its review/approval process and eliminated 50 percent of process steps involved with case management, reducing internal review time from approximately 4.5 days to 1.3 days. In addition, OPM published agency guidance in August 2006 with detailed instruction on the uses of buyout and early-out authorities. Also, an OPM session on early-outs/buyouts, at a November 2006 Interagency Forum for Senior Recruitment and Staffing Policy Professionals, facilitated information sharing and provided guidance on use of the authorities.

    Recommendation: To help ensure that agencies can take full advantage of the authorities to use buyouts and early outs to reshape their workforces, the Director of OPM, in conjunction with the CHCO Council, should help agencies identify ways they can determine the extent to which the authorities have been effective tools and will continue to be in the future, and how agencies may need to tailor their reshaping strategies accordingly.

    Agency Affected: Office of Personnel Management

    Status: Closed - Implemented

    Comments: OPM worked with agencies to tailor their approaches to their reshaping strategies by consulting with agencies on an individual basis to determine whether buyouts and early-outs, or a combination of both plans is most appropriate, based on needs, budget, and overall strategy. For example, after implementation of the authority(ies), some agencies worked with OPM to obtain amendments to expand eligibility coverage, or extensions in order to increase opportunities to reshape workforces and improve effectiveness. In FY 2007, OPM reviewed 142 VERA requests - 137 were approved, 1 was withdrawn by the requesting agency and 4 were returned without further action. Also, in FY 2007, OPM reviewed 104 VSIP requests - 96 were approved, 4 were withdrawn by the requesting agency and 4 were returned without further action. OPM continues to consult with agencies on an individual basis to determine whether VERA, VSIP, or a combination of both plans is most appropriate, based on needs, budget, and overall strategy.

    Recommendation: To help ensure that agencies can take full advantage of the authorities to use buyouts and early outs to reshape their workforces, the Director of OPM, in conjunction with the CHCO Council, should assess potential program improvements, such as those the agencies have identified, for possible governmentwide implementation, then take the steps necessary to accomplish this, such as changing the regulations governing the program, or proposing any needed statutory changes.

    Agency Affected: Office of Personnel Management

    Status: Closed - Implemented

    Comments: OPM has conducted an assessment of potential program improvements to VERA/VSIP based on those identified by agencies. OPM has concluded that government-wide improvements, including lifting the $25,000 ceiling, are not warranted at this time. However, OPM plans to continue to evaluate individual agency proposals and consider government-wide reforms to alleviate any future discrepancies should they arise.

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