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Performance Management: DOD Is Terminating the National Security Personnel System, but Needs a Strategic Plan to Guide Its Design of a New System

GAO-11-524R Published: Apr 28, 2011. Publicly Released: Apr 28, 2011.
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Highlights

The Department of Defense (DOD) is one of the largest and most complex organizations in the world and faces challenges in managing its human capital--particularly its diverse civilian workforce. Our prior work has noted that over time federal positions, including those within DOD, have become increasingly specialized and more highly skilled, resulting in a need for managers to have greater flexibility in hiring and compensating employees. As a result, the department took steps--pursuant to the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2004--to provide managers with greater flexibility in hiring and implemented a performance management system that sought to reward civilian employees' performance and contributions to the agencies' missions rather than to reward longevity in a position. Specifically, in 2004, DOD established the National Security Personnel System (NSPS)--a human capital system that significantly redesigned the rules, regulations, and processes that governed the way civilian employees were hired, compensated, and promoted at DOD. In 2006, the department began converting its civilian employees to NSPS. From its inception, NSPS was criticized and faced challenges from unions and employees regarding several issues, including inconsistent application of the system, pay inequities, and a lack of stakeholder involvement. Since 2003, we have reported on NSPS, covering issues such as DOD's initial regulations for the system and the pace at which it was implemented. We noted in these reports that how human capital reform is done, when it is done, and the basis upon which it is done can make a difference in whether such efforts are successful. In light of the concerns and challenges facing NSPS, the NDAA for FY 2010 contained provisions to terminate the system. Specifically, the act repealed the statutory authority for NSPS and directed the Secretary of Defense to begin, no later than 6 months from the enactment of the law, to take all actions necessary to provide for the orderly termination of NSPS and the conversion of all NSPS employees and positions from NSPS. The act also provided direction regarding DOD's pay and personnel system and a new performance management system. More specifically, regarding the pay and personnel systems, the act directed the Secretary to (1) convert employees, no later than January 1, 2012, to the statutory pay system and all other aspects of the personnel system that last applied or would have applied if NSPS had not been established and (2) ensure that no employee shall suffer any loss of or decrease in pay as a result of the conversion. Regarding the new performance management system, the act directed the Secretary to promulgate, in coordination with the Director of the Office of Personnel Management, regulations providing for, among other things, (1) a fair, credible, and transparent performance appraisal system for employees that links bonuses and other performance-based actions to performance appraisals; (2) a process for ensuring ongoing feedback and dialogue; and (3) development of a plan designed to give employees training, counseling, mentoring, and other assistance. The act did not specify a date for completion of DOD's new performance management system. At the time that DOD's authority for NSPS was repealed, approximately 226,000 DOD civilian employees throughout the department were under the system

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense To promote an efficient use of resources and to better plan for the design of a new performance management system, the Secretary of Defense should direct the Deputy Assistant Secretary of Defense for Civilian Personnel Policy to, in conjunction with the DOD Comptroller, help ensure that information identifying and supporting the costs of the NSPS termination and new performance management system is documented, reliable, traceable to a source document, and readily available for examination.
Closed – Not Implemented
GAO staff met with DOD officials in October 2019 to discuss the status of the department's new performance management system and any efforts to address this recommendation. DOD officials agreed to provide documentation related to these efforts; however, information subsequently provided by the department to GAO in February 2020 indicated that any record of discussions or data related to the costs of the NSPS termination and/or transition to any new performance management system had been disposed of within established record disposition timeframes. This is unfortunate, given that GAO staff followed up on this recommendation following the issuance of the 2011 GAO report, well in advance of the disposition timeframe. However, at that time, GAO staff were unable to obtain access to necessary officials or documents following the NSPS termination to effectively verify whether DOD took appropriate actions to sufficiently address this recommendation.
Department of Defense To promote an efficient use of resources and to better plan for the design of a new performance management system, the Secretary of Defense should direct the Deputy Assistant Secretary of Defense for Civilian Personnel Policy to develop a plan with documented near-term design and implementation goals and a timeline for meeting these goals to build momentum and show progress for the development of an enterprisewide performance management system and to facilitate an assessment of what is being achieved as a result of the resources being spent.
Closed – Implemented
Section 1102(b) of the National Defense Authorization Act for Fiscal Year 2013, Public Law 112-81 requires the Secretary of Defense to report semiannually on the progress on the implementation of a new performance management system and other flexibilities related to appointments. To date, DOD has issued five progress reports. In the most recent progress report, dated June 29, 2015, the Department stated that it continues to demonstrate progress toward full implementation of the personnel authorities. The report discusses prior actions taken by DOD, in conjunction with the labor unions, in an effort to build momentum and show progress for the development of a new performance management system. The report provides a target timeframe of April 2015 to begin phased implementation of the new DOD Performance Management and Appraisal Program. P.L. 112-81 requires continued reporting on the progress until all personnel authorities are fully implemented, which will facilitate and help ensure the department's efforts to assess what is being achieved given the resources spent.

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Topics

Cost analysisDocumentationEmployeesHuman capital managementHuman capital planningLabor unionsNational security personnel systemPayPerformance appraisalPerformance managementStrategic planningSystems analysisSystems conversionsSystems design