Federal Pay: Opportunities Exist to Enhance Strategic Use of Special Payments

Federal agencies can provide additional compensation by using seven broadly available special payment authorities to recruit and retain employees to address needed skills. Though special payments can help fill mission-critical skills gaps, agencies also face constrained budgets, which underscores the importance of cost-effective use of authorities. OPM and the CHCO Council play important roles in assuring effective federal human capital management.

GAO was asked to examine agency use, challenges, and improvements needed, if any. This report 1) describes CHCO agencies' use of special payment authorities in fiscal years 2014-2016; 2) assesses to what extent CHCO agencies examined effectiveness; and 3) evaluates how OPM has helped agencies address recruitment and retention needs. GAO obtained information from CHCO agencies on use of authorities through a questionnaire. GAO also analyzed OPM personnel data and agency documents, and interviewed agency officials.

Generally, federal agencies have seven broadly available government-wide special payment authorities to help address recruitment and retention challenges. Chief Human Capital Officer (CHCO) Council agencies reported using these authorities to varying degrees but overall for few employees in fiscal years 2014-2016. For example, in fiscal year 2016, less than 6 percent of the over 2 million CHCO agencies' employees received compensation from at least one of the authorities (see figure). The two most frequently used—special rates and retention incentives—were used for over 74,000 employees and over 13,000 employees, respectively, each year. The least-used—critical position pay—was used for as few as seven employees a year. CHCO agencies also reported using the range of authorities to help address skills gaps, particularly for science, technology, engineering, and mathematics occupations.

CHCO Agency Employees Receiving Special Payments, Fiscal Year 2016

CHCO agencies reported that these authorities had positive impacts—such as on-staff retention and applicant quality—but had few documented effectiveness assessments. Nine of 10 agencies that reported having documented assessments provided them, but GAO found that only 3 had information on effectiveness, such as its impact on meeting staffing needs.

The Office of Personnel Management (OPM) collects agency data on use but has not tracked data to analyze how much authorities help agencies improve recruitment and retention government-wide. OPM may be missing opportunities to promote strategic use by providing guidance and tools on assessing effectiveness. For example, OPM has not explored reasons for trends in use of critical position pay or consistently shared best practices and innovative ways to use authorities. Without tracking data and providing guidance to help agencies assess effectiveness, OPM will be unable to determine whether use of special payment authorities helps agencies to improve recruitment and retention.

GAO is making three recommendations, including that OPM should work with the CHCO Council on tracking data and providing guidance and tools to assess effectiveness of authorities, among others. OPM concurred or partially concurred with all recommendations, and described planned steps to implement them.

Federal agencies can provide additional payments to current employees  and offer additional compensation to prospective employees in certain  circumstances to support their recruitment and retention efforts, and  address human capital challenges. These special payments can be  strategic tools to help recruit and retain highly qualified personnel.  However, balancing constrained budgets with a potential wave of  employee retirements and the need to fill gaps in mission-critical skills  within the federal workforce underscores the need for agencies to cost  effectively use special payment authorities. These include special pay  rates, incentives, and student loan repayments.

The Office of Personnel Management (OPM) works with agency chief  human capital officers (CHCOs) to provide human capital tools and  guidance to support agency missions. Continued collaborative efforts  between OPM and the CHCO Council assist agencies in using  compensation flexibilities to address human capital challenges. Our prior  work has shown that increasing agencies’ awareness of available  flexibilities and evaluating existing tools are key aspects for successfully  managing the range of human capital flexibilities. Moreover, we have  reported that building agency capacity in using human capital flexibilities  increases the likelihood of agencies using these tools appropriately and  cost effectively to address human capital challenges.

You asked us to examine how much agencies use various available  special payment authorities, challenges agencies face, and improvements  needed to better ensure that agencies use these authorities to more  effectively recruit and retain employees. This report (1) describes what is  known about how much CHCO Council agencies used selected special  payment authorities in fiscal years 2014-2016; (2) assesses the extent to  which CHCO agencies evaluate the effectiveness of these authorities and  identifies challenges, if any, the agencies reported facing in using the  authorities to address mission-critical skills gap areas; and (3) evaluates  how OPM has helped agencies address federal recruitment and retention  needs.

To address our first objective, we administered a questionnaire to the 27  CHCO agencies to collect data on frequency of use, dollars spent, and  whether agencies used the authorities to help address recruitment and  retention needs in mission-critical skills gap areas in fiscal years 2014- 2016. All 26 CHCO agencies that reported use of the authorities  responded to our questionnaire. We also analyzed OPM’s Enterprise  Human Resources Integration (EHRI) personnel data for fiscal year 2014  to describe the use of authorities by occupational family, and for fiscal  year 2016 to determine the total number of federal employees at the  CHCO agencies.

In addition, we analyzed OPM reports on the student loan repayment and  the critical position pay authorities to describe government-wide use by  occupation in calendar year 2015—the most recent available reports at  the time of our review. To assess the reliability of the CHCO agency  reported data and the OPM EHRI data, we compared frequencies in the  two data sets by agency for fiscal year 2014 (the one year of available  overlapping data); reviewed OPM documentation; and interviewed OPM  officials. We determined that the data were sufficiently reliable to describe  agency use of these authorities over this time period.

To address our second objective, we analyzed CHCO agency responses  from our questionnaire on the extent to which these agencies assessed  the effectiveness of using these authorities, agency-reported challenges  in using these authorities, and potential changes to operations or  procedures to help agencies more effectively use these authorities.

To address our third objective, we reviewed OPM procedures to collect  and analyze data, and provide tools and guidance on the effective use of  special payment authorities. We also reviewed the processes OPM uses  to review and approve agencies’ requests to use certain special payment  authorities. We also interviewed OPM officials to discuss the review and  approval processes and procedures. We compared the data collection,  analysis, guidance, and approval processes for consistency and to  determine whether they meet criteria for designing and implementing  control activities in Standards for Internal Control in the Federal  Government. See appendix I for a more detailed discussion of our  objectives, scope, and methodology, and appendix II for a copy of our  questionnaire.

We conducted this performance audit from September 2016 to December  2017 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

Generally, federal agencies have seven broadly applicable special  payment authorities available government-wide under Title 5 of the United  States Code (hereinafter “Title 5”)—listed below in table 1—for  recruitment and retention. Table 1 describes each authority’s legal  reference, purpose, payment ranges, and whether an agency must seek  OPM approval prior to use.

Federal agencies face mission-critical skills gaps that pose a risk to  agencies’ ability to cost effectively serve the public and achieve results.  Agencies can have skills gaps for different reasons. For example, skills  gaps may arise in the form of: (1) staffing gaps, in which an agency has  an insufficient number of individuals to complete its work; (2) competency  gaps, in which an agency has individuals without the appropriate skills,  abilities, or behaviors to successfully perform the work; or (3) both staffing  and competency gaps. Mission-critical skills gaps may be broad— affecting several agencies—or may be specific to a given agency.

We, and others including OPM and federal agencies, have identified and  reported on mission-critical skills gap areas across the government and  within specific agencies. In 2015, OPM and the CHCO Council worked  with agencies to refine their inventory of government-wide and agency- specific skills gaps. They identified 6 government-wide and 48 agency- specific mission-critical skills gap areas for closure. The six government- wide areas identified were Cybersecurity; Acquisition; Human Resources;  Auditing; Economics; and Science, Technology, Engineering, and  Mathematics (STEM). Some of the agency-specific skills gaps included  border patrol agents at the Department of Homeland Security and nurses  at the Veterans Health Administration and the Department of Health and  Human Services. Skills gaps played a contributing role in 15 of the 34  high-risk areas identified in our most recent report on government  operations with greater vulnerabilities to fraud, waste, abuse, and  mismanagement, or that are in need of transformation to address  economy, efficiency, or effectiveness challenges.

OPM is responsible for performing a number of functions to assist  agencies in using the compensation flexibilities, including issuing  regulations and, as necessary, providing approval authority, to ultimately  help agencies build successful, high-performance organizations. OPM  provides agencies with guidance and assistance on using special  payment authorities via individual consults, memorandums, its website,  training, and initiatives that focus on specific issues. OPM’s website has  guidance on each special payment authority including references to  regulations.

For special payment authorities requiring OPM approval, OPM  regulations provide agencies instruction concerning the information  needed for OPM to review and decide whether to approve or deny  requests. Although the information needs vary by authority, generally  agencies are to submit information and evidence reflecting recruitment  and retention challenges for the specific position(s), previous efforts to  address the problem, and the basis for requested payment amounts.

OPM is responsible for oversight of the federal government’s use of  special payment authorities to ensure agencies are acting in accordance with applicable requirements. For example, as a part of its delegated  examination audits and human resource management evaluations, OPM  reviews selected samples of agency’s personnel actions to assess how  well they complied with statutory and regulatory requirements. In cases  where agencies used certain special payment authorities, OPM uses a  checklist to guide its review of documents agencies must develop and  maintain to justify their uses.

OPM also is responsible for reporting to Congress on the federal  government’s use of certain special payment authorities. Annually, OPM  requests or receives data from agencies and reports to Congress on  agency use of two authorities—critical position pay and the student loan  repayment. The reports include information on the use of these  authorities each calendar year—such as data showing how many  received payments—and the total dollar or relative amounts of special  payments. OPM was required to annually report to Congress on  agencies’ use of the recruitment, relocation, and retention (3R) incentives  in calendar years 2005-2009.

The Chief Human Capital Officers Act of 2002 established the CHCO  Council to advise and coordinate the activities of member agencies on  such matters as the modernization of human resources systems,  improved quality of human resources information, and legislation affecting  human resources operations and organizations. The Director of OPM is  the Chairperson of the CHCO Council, and the Deputy Director for  Management in OMB is the Vice Chairperson. The council includes  CHCOs of the executive departments and any other members designated  by OPM. It serves to coordinate and collaborate on the development  and implementation of federal human capital policies. For example, the CHCO Council manages the Human Resources University (HRU)  website, which is a web-based platform to share knowledge, training, best  practices, and resources across agencies.

Agencies Reported Using Special Payment Authorities to Varying Degrees but for Few Employees in Fiscal Years 2014-2016

Agencies Reported Using a Range of Special Payment Authorities

CHCO agencies used a range of special payment authorities to recruit  and retain employees. Our analysis of CHCO agency data found that for  six selected authorities, 20 or more agencies used each between fiscal  years 2014-2016, as shown in figure 1. Seven agencies reported having  used the critical position pay authority.

Agency Data Show, Overall, Few Employees Received Compensation from Special Payment Authorities

We found that CHCO agencies reported using the seven authorities for a  small number of federal employees overall. For example, in fiscal year  2016, less than 6 percent of the over 2 million federal employees at  CHCO agencies received compensation under at least one of the seven  special payment authorities, as shown in figure 2.

Moreover, many agencies reported using most of these authorities for a  limited number of employees each year. For example, of the 24 agencies  that reported using superior qualifications and special needs pay  setting—the authority reportedly used by the highest number of CHCO  agencies—over half (13 agencies) reported using the authority for fewer  than 100 employees per year. In addition, of the 23 agencies that  reported using recruitment incentives in fiscal years 2014-2016, 11  agencies reported using the authority for 10 or fewer employees per year.

As shown in table 2, agencies reported that more employees received  compensation from the special rates authority, followed by use of  retention incentives in fiscal years 2014-2016. Specifically, agencies  reported using special rates for over 74,000 employees, of the over 2  million CHCO agency employees, in each of these fiscal years. On the  other end of the spectrum, agencies reported using the critical position  pay authority for fewer than 40 employees in each of these years.

Special rates: Although CHCO agencies reported that more employees  received special rates compensation than the other authorities in fiscal  years 2014-2016, our analysis showed usage generally declined from  between 2001- 2005, when over 139,000 employees received a special  rate. An OPM official said that over time agencies have relied less on  these special rates due to the introduction of locality pay. For example,  in its 2005 annual review of special rates, OPM reported that 14 special  rates schedules would be terminated because higher locality rates  applied at all steps of each covered grade.

Critical position pay: We found that the critical position pay authority  was used for the lowest number of employees of these authorities each  year in fiscal years 2014-2016. The authority’s lower use relative to the  other authorities is to be expected to some extent because of the  government-wide cap of 800 positions for this authority.

Agencies Reported Spending about $800 Million on 3R Incentives and Student Loan Repayments

Our analysis of CHCO agency questionnaire responses found that these  agencies reported spending about $805 million total on 3R incentives and  the student loan repayment authorities in fiscal years 2014-2016. In  addition, we found that these agencies reported spending more on  retention incentives than on the other three authorities in each of these  years, as shown in figure 3. Specifically, over 40 percent (about $333  million) of this total reported spending was for retention incentives.

In addition, the agency reported use of recruitment and relocation  incentives increased in each year. Overall, recruitment and relocation  incentives were about $174 million and $149 million, respectively, of the  total approximately $805 million in reported spending between fiscal  years 2014-2016. OPM officials stated that until recently agency spending  on 3R incentives had been frozen, and many agencies had to limit their  use of these incentives. Finally, agency reported use of the student loan  repayment authority increased in each of these years and was  approximately $148 million of the total approximately $805 in reported  spending.

Agencies Used the Range of Authorities to Address Skills Gaps

CHCO Agencies Reported Using Authorities to Help Address Different Skills Gaps, Particularly for STEM Occupations

All 26 CHCO agencies reported using special payment authorities to  support mission-critical skills gap areas in fiscal years 2014-2016. We  found that the number of CHCO agencies that used each of these  authorities varied by skills gap area, as shown in table 3. For example, we  found that superior qualifications and special needs pay setting was the  authority used by the largest number of CHCO agencies in two of the five  skills gap areas—STEM and Cybersecurity. We also found that 19 or  more agencies reported using at least one authority to support four skills  gap areas—STEM, Cybersecurity, Acquisitions, and Human Resources.  Some CHCO agencies reported that certain skills gap areas were not  mission critical for them. Specifically, 11 agencies reported that  healthcare was not a skills gap area for them as compared to 2 or 3  agencies each for the other skills gap areas.

STEM: Our analysis of the CHCO agency data found that, of the five  skills gap areas, more agencies generally reported using the special  payment authorities to support STEM occupations. Of the 21 agencies  that reported using at least one authority to support the STEM area, we  found that 18 agencies reported using the superior qualifications and  special needs pay setting authority for these occupations in fiscal years  2014-2016. The Department of Agriculture (USDA), for example, reported  that this authority had been a valuable tool in recruiting for critical STEM  positions from a small and highly competitive Ph.D. applicant pool. The  Department of the Treasury (Treasury) reported using special payment  authorities generally to match private-sector salaries or to help mitigate  disparities between private- and public-sector compensation for STEM  occupations.

Cybersecurity: Similarly, of the 21 agencies that reported using at least  one authority to support the cybersecurity area, 16 reported using  superior qualifications and special needs pay setting to support these  positions in fiscal years 2014-2016, and 13 agencies reported using  recruitment incentives. For example, the Small Business Administration  reported that the superior qualifications and special needs pay setting  authority has helped to attract top cybersecurity talent by narrowing the  gap between public- and private-sector salaries.

Acquisitions: Of the 20 agencies that reported using at least one  authority to support the acquisitions area, 14 agencies reported using the  student loan repayment authority, and 13 agencies reported using the  superior qualifications and special needs pay setting authority for these  positions. For example, the Department of Education reported using  student loan repayments to help retain acquisitions employees, and in  one instance, had retained an expert in multiple functional areas of  government contracting.

Other agency-identified skills gap areas: We also found that 20 of the  26 CHCO agencies reported using special payment authorities to varying  degrees to help address other or agency-specific skills gap areas. For  example, Treasury reported using recruitment incentives for auditors,  while the Department of Homeland Security (DHS) reported using  multiple authorities, including the 3R incentives for law enforcement  positions in fiscal years 2014-2016.

Agencies Frequently Used the Student Loan Repayment Authority to Support Mission- Critical Occupations

Our analysis of OPM’s Federal Student Loan Repayment Program  Calendar Year 2015 Report on government-wide use found that agencies  frequently used the student loan repayment authority for employees in  mission-critical occupations (MCOs). Specifically, we found that for the  five agencies that most frequently used student loan repayments that  year—the Departments of Defense (DOD), Veterans Affairs (VA), Justice  (DOJ), and State (State), and the Securities and Exchange Commission (SEC)—over 50 percent of the employees at each agency who received  these benefits were in agency-specific MCOs. For example, SEC  reported to OPM that approximately 72 percent of its student loan  repayments were made to employees in MCOs such as accountants,  attorneys, and securities compliance examiners. We also found that other  agencies used the authority for employees in MCOs. For example, the  Department of the Interior (Interior) reported to OPM that using the  authority has been helpful in filling MCOs such as petroleum engineers,  geophysicists, and biologists.

Our analysis of OPM’s 2015 report also found that the 32 agencies that  had used the authority that year did so for over 200 occupations. Overall,  we found that agencies most frequently used student loan repayments for  attorney-, engineer-, and contracting-related occupations, as shown in  figure 4.

Our review of OPM’s report to Congress on critical position pay in  calendar year 2015 found that, as of calendar year 2015, all four positions  that received the critical position pay authority were for director or other  senior executive positions. For example, the positions of Administrator  of the Transportation Security Administration and the Director of the  National Institutes of Health received compensation under this authority in  calendar year 2015. Since OPM’s 2015 report, OPM officials told us that  they had approved 68 additional positions for the critical position pay  authority for certain Medical Center Director positions at VA. According to  data provided by VA in response to our questionnaire, the agency  reported using its recently approved authority in fiscal year 2016 for 27 of  these positions.

Agencies Generally Reported Positive Impacts but Few Documented Their Assessments of Special Payment Authorities

Agencies Generally Reported Positive Impacts

CHCO agencies generally reported that special payment authorities  positively affected areas of operation. More specifically, these agencies  reported the authorities somewhat or very positively affected at least one  of seven areas we identified in our questionnaire such as staff retention,  ability to meet staffing needs, or ability to fill mission-critical positions (see  appendix III for the results for the other special payment authorities). For  example, the 19 agencies that reported using the special rates authority  said it had somewhat or very positively impacted their ability to meet their  staffing needs, and 17 reported the same for staff retention and achieving  their missions (see table 4).

CHCO agencies generally reported that special payment authorities  somewhat or very positively affected their ability to fill mission critical  positions. Agencies provided specific examples of the positive impact of  special payment authorities and ways they responded to challenges using  special payment authorities:

Student loan repayment authority: The Department of Commerce  reported that multiple components found this authority useful for  competing with the private sector and for building a pipeline of top  talent given that most of these employees were at the beginning of  their careers.

Relocation incentives: The Department of Energy reported using  these incentives to relocate employees to meet emergency needs,  including a shutdown of the Waste Isolation Plant Project in Carlsbad,  New Mexico.

Recruitment incentives: DOD reported that it would not have been  able to effectively recruit individuals in several career fields, including  engineering and nursing, without these incentives. Moreover, the  Social Security Administration credited these incentives for its  success in hiring experts from major corporations for cybersecurity  and other program policy area positions.

Retention incentives: The Environmental Protection Agency credited  a retention incentive for successfully retaining a senior research  scientist, thereby addressing a mission-critical skills gap and allowing  the agency’s mission to continue uninterrupted and at significant  savings. Moreover, State explained how using a retention incentive  helped to address its Bureau of Medical Services’ severe staffing  shortages due to uncompetitive base salaries. VA also stated that  these incentives helped create a smooth transition of institutional  knowledge to newer employees and facilitate continuity of operations.  DHS responded to its need to attract and retain employees in  information technology (IT) and cybersecurity by developing a unique  retention incentive plan that focused on specialized certification for  employees in these fields. The Department of Health and Human  Services’ (HHS) Centers for Disease Control and Prevention (CDC)  used retention incentives to retain employees that might have moved  to the private sector.

Superior qualifications and special needs pay: HHS’s CDC  reported it has been successfully using this authority to attract IT  specialists, an occupation series designated as “hard-to-fill.” HHS  credited this authority with attracting highly qualified applicants who  would otherwise have accepted higher starting salaries outside the  federal government. USDA included use of this authority in its  approach to addressing challenges recruiting and retaining employees  in the remote oil boom Bakken region in North Dakota and Montana.

Most Agencies Reported Assessing Special Payment Authorities, but Few Agencies Documented Their Effectiveness Assessments

Twenty-five of 26 CHCO agencies reported assessing the effectiveness  of at least one special payment authority used in fiscal years 2014-2016.  However, our analysis found in many cases agencies did not document  their assessments. Moreover, agencies often did not assess the  effectiveness of all authorities they used. For example,

4 agencies reported having no assessments for the majority of the  special payment authorities they used, and

11 agencies reported not assessing at least one of the authorities they  used.

As seen in table 5, overall, CHCO agencies reported conducting informal  effectiveness assessments more often than documenting assessments of  their uses of special payment authorities.

Our analysis of CHCO agency responses found the extent to which these  agencies documented assessments of effectiveness varied by payment  authority. For example, agencies reported most frequently documenting  assessments for recruitment incentives and the student loan repayment  authority. On the other hand, 3 of the 24 agencies using the superior  qualifications and special needs pay setting authority reported  documented assessments. For each of the authorities, a small number of  agencies reported not assessing effectiveness at all. For instance, 5 of  the 21 agencies using retention incentives did not assess their  effectiveness. OPM said it did not document assessments of the  effectiveness of the authorities the agency used for its own employees  because meaningful analyses were not possible due to the few  employees who received compensation under the authorities OPM used.

CHCO agencies that reported documenting assessments identified the  various impacts they assessed for the special payment authorities they  used. More specifically, of the 10 CHCO agencies that reported having  documented assessments, agencies most frequently reported evaluating  the impact of these authorities on meeting staffing needs and on their  effectiveness relative to other human capital flexibilities. This included  DOD, which reported documenting assessments for five authorities— special rates, the 3Rs, and student loan repayments—on its operations.

We requested copies of documented assessments from the 10 CHCO  agencies that reported having them and 9 responded. Three of the nine  responding agencies provided documents with information on authorities’  effectiveness, such as the impact on meeting staffing needs. Specifically,  Interior provided documentation that showed the agency tracked  workforce data, such as the number of vacancies and turnover rates  related to using the 3Rs and special rates focused on oil and gas  extraction. DOD and DHS included information on the student loan  repayment authority in their annual reports to OPM, and credited student  loan repayments with helping to retain highly qualified employees. Six of  the nine responding agencies provided documentation that justified or  reported on the use of special payment authorities rather than  documentation that assessed the impacts that using authorities had on  agency operations. For example, three of these six agencies provided  examples of reviews or information addressing compliance with  regulations relevant to the use of special payment authorities. Three other  of these six agencies provided documents to justify and request approval  to use 3R incentives, such as to show applicants’ qualifications or current  employees’ performance appraisals.

The Most Frequently Identified Challenge Was Insufficient Resources, but Most Agencies Reported Rarely or Never Experiencing Other Types of Challenges

CHCO agencies reported that, among the six potential challenges we  identified in our questionnaire, insufficient resources was the most  common challenge they experienced in using special payment authorities.  Most CHCO agencies reported they rarely or never experienced other  challenges. With respect to insufficient resources, 13 of the 26 agencies  said they regularly or always experienced this challenge (see figure 5).  According to three of these agencies, budget constraints prevented them  from using special payment authorities more frequently or limited their  use to filling only the most critical vacancies.

Four CHCO agencies said they regularly or always experienced  challenges with burdensome documentation or complex approval process  when using special pay authorities.

We also sought feedback on certain agencies’ experiences with OPM’s  approval processes for special payment authorities. Below are details of  challenges that agencies provided.

Interior stated that the department and its components were required  to provide a significant amount of historical data to justify the need for  special salary table, and that publicly-available data on market  analyses and trends should drive the special pay rate process,  thereby making it easier for agencies to submit requests and to adapt  to current conditions.

HHS reported that documenting special payment authorities was  overly complicated for some of its divisions with smaller human  resources (HR) staffs.

The Department of Transportation (DOT) commented on the  timeliness of OPM and OMB approvals for using the critical position  pay authority. DOT said this delay–approximately 5 months–could  have been a driving factor that negatively affected recruitment for a  position, as other agencies could negotiate to offer the candidate  higher salaries.

Interior similarly cited a concern with approval process timeliness due  to OPM’s limited staff and expertise coordinating between all the  involved federal agencies with which it must deal.

Interior suggested that when an agency must request pay flexibilities  that can be approved by only OPM, OPM should train the agency’s  HR staff and managers on the processes and materials needed to  justify their requests, and should provide a clear understanding of  timelines for approvals.

However, multiple CHCO agencies reported only rarely or never  experiencing documentation or process challenges. For example, Interior  credited OPM with collaborating to establish special rates to address  challenges in competing with the oil and gas industry for the talent  needed to meet Interior’s mission. DOD and DOJ also conveyed positive  views on OPM’s approval process, crediting it with expediting a waiver  request for a group retention incentive limitation and use of special rates,  respectively.

Agencies Reported That Manager Training Would Likely Improve Use of Special Payment Authorities

CHCO agencies most frequently said training for agency managers is a  change that would very likely or certainly improve the agency’s ability to  effectively use special payment authorities (see figure 6). Conversely,  about a quarter of responding agencies said legislative changes very  likely or certainly would improve their ability to use special payment  authorities.

CHCO agencies provided examples of how potential changes would  improve their ability to effectively use special pay authorities. VA  responded that its central HR office was developing a pay authority toolkit  to provide information on processes and procedures for using the  authorities and related training for HR specialists and managers.  According to VA, the toolkit, mandatory training, and regularly-scheduled  refresher training were likely to increase staff’s knowledge and ease with  using pay flexibilities to develop competitive compensation packages to  help recruit and retain quality talent and fill critical positions. HHS also  expressed concerns about the use of special payment authorities in the  context of ongoing budget constraints. Specifically, HHS noted that  budget restraints over the last several years have led to retirements and  resignations among its more experienced HR staff. This resulted in a loss  of institutional knowledge on complex pay and leave authorities, including  those affecting special payments. HHS officials said the loss of  experienced HR staff diminishes the agency’s internal capacity to train  remaining staff. In addition, budgetary controls result in fewer resources  for external training. Also, Interior commented that, for special payment  authorities that can be approved by only OPM, OPM should provide  training for their HR staff and managers responsible for using them.

OPM Has Provided Some Guidance and Collects Some Data, but Has Not Assessed Effectiveness or Documented Approval Processes

OPM Provided Guidance and Other Assistance

OPM has taken a number of steps to provide agencies with additional  guidance and assistance on using special payment authorities. For  example, in April 2015, OPM and the CHCO Council held a web-based,  virtual human resources conference for agency officials which included a  session on special payment authorities for recruitment and retention.  Moreover, in January 2016, OPM issued a memorandum to agency  CHCOs that stated that OPM recognized the 3Rs are essential pay  flexibilities for agencies facing serious staffing challenges. The  memorandum provided guidance on exceptions to spending limits on 3R  incentives and OPM website links to related guidance on using the  authorities. In August 2017, OPM posted a web-based training course  for agency officials on special payment authorities and other flexibilities,  including examples of their use and resources for additional information.

OPM has also pursued initiatives that focus attention on addressing  mission-critical skills gaps areas. As part of government-wide efforts to  develop and strengthen the cybersecurity workforce, in November 2016,  OPM issued a memorandum and guidance to CHCOs on strategic and  cost-effective use of the various flexibilities agencies may employ to  recruit and retain employees in cybersecurity positions. The guidance  included checklists of steps agencies need to complete to use various  special payment authorities, and described ways to combine use of  special payment authorities, when appropriate, to make federal agencies  more competitive in recruiting and retaining cybersecurity employees.

OPM also formed Federal Agencies Skills Teams (FASTs) for  occupations as an effort to help agencies address mission-critical skills  gaps areas. As part of FASTs, OPM collected and reviewed information  from agencies on the root causes of skills gaps and found that  compensation levels play a role in skills gaps, in some cases. As of  August 2016, OPM’s approach included a strategy to hold agencies  accountable for closing skills gaps in their MCOs, and to monitor metrics  and progress through fiscal year 2020. In January 2015, we reported that  the measures agencies had in place limited OPM and the CHCO  Council’s ability to track progress in closing skills gaps government- wide.  Accordingly, we recommended that OPM strengthen the  approach and methodology for addressing skills gaps by working with the  CHCO Council to develop targets that are clear, measurable, and  outcome oriented. OPM partially concurred with the recommendation.

OPM Does Not Track Special Payment Authorities to Assess Whether Using Them Improves Recruitment and Retention

It is important to identify the necessary data and establish measures to  track a program’s effectiveness, as well as establish a baseline to  measure changes over time and assess the program in the future. We  have reported that agencies can use these measurements to help them  determine if a program is worth the investment, and to distinguish which  of the available human capital flexibilities is better suited to address  recruitment and retention needs. Standards for Internal Control in the  Federal Government also state that management should obtain relevant  data from reliable sources that can be used to effectively monitor  programs. We have reported that understanding the relative  effectiveness of various flexibilities can help identify any changes needed  for agencies to more effectively use them. As we also recently reported,  collecting and using data to assess the effectiveness of authorities would  be a critical first step in making more strategic use of flexibilities to  effectively meet hiring needs.

OPM collects agency data on the use of special payment authorities via  annual reporting on certain authorities and EHRI, but has not analyzed  whether the payment authorities help agencies to improve recruitment  and retention government-wide. Nor has OPM assessed trends and  factors that can affect the use of these authorities. As required by statute,  OPM annually collects data from agencies to report to Congress on the  use of the student loan repayment and critical position pay authorities.

Student loan repayment: OPM collects some information from  agencies about their use of student loan repayment authority and  invites agencies to provide details about their experiences in  administering the authority, but has not conducted an analysis of the  authority’s effectiveness for addressing recruitment and retention  needs. As discussed previously, we analyzed the government-wide  use of this authority by occupation and identified those occupations  for which agencies most frequently used the authority (see figure 4).  In addition, we used OPM’s 2015 report and information from its  FASTs skills gap initiative to identify the use of this authority for  MCOs. These are two examples of analyses that OPM could perform  to help understand how agencies are using this authority.

Critical position pay: OPM collects data on agency use of critical  position pay from the agencies with existing OPM approval, but the  information does not help OPM understand how the payment authority  supports recruitment or retention. OPM collects data that it is required  by statute to report to Congress such as who received the higher rate  and the rate paid, but does not include information on the impact on  recruitment and retention.

OPM has stopped regularly collecting and analyzing data for the 3R  incentives, except on the use of retention incentives for employees likely  to leave for other federal agencies, and does not collect and analyze data  for special rates, leaving a void for conducting government-wide analysis  that would help determine whether special payment authorities help  address agency recruitment and retention needs:

3R incentives: In a February 2010 memorandum to agency CHCOs  on 3R incentives, OPM called for it and agencies to more actively  manage the program and track data. OPM said that validated data  would help OPM and agencies to understand the nature and trends of  use of the incentives and better track incentives on an ongoing basis.  OPM and agencies would also, if necessary, be better able to  investigate any 3R data anomalies and take corrective actions. Based  on its request to agencies in October 2011, OPM prepared a draft  report on its analysis of agency-provided data and information on use  of 3R incentives in calendar years 2010 and 2011, including what  agencies reported as barriers to using the authorities and whether 3R  improved recruitment and retention. However, OPM did not  distribute the report or take action on it. Although OPM said it  planned to conduct periodic reviews on an ongoing basis, since the  3R reporting requirement expired and OPM’s October 2011 agency  data request, OPM does not regularly collect and review government- wide information on the level of use and potential barriers.

Special rates: In conducting its annual review of special rates, each  year OPM asks that agencies review their respective applicable  special pay rate tables to determine whether the rates should be  terminated, reduced, or increased. OPM considers requests to make  changes based on the agency reviews, but according to OPM  officials, in recent years, agencies have not identified any needed  changes to special rates during that annual review process.

Moreover, OPM has not used its EHRI data to better understand trends in  the use of these authorities government-wide and how agencies are using  them to address their recruitment and retention challenges. As an  example, we analyzed EHRI data to describe government-wide use of  selected authorities by occupational family in fiscal year 2014. From that  analysis, we identified differences in use across various occupational  families that could be helpful in understanding how agencies are using  these authorities. For example, we found that the Medical, Hospital,  Dental, and Public Health family was the top occupational family for four  of the five authorities. See appendix IV for additional information.

OPM also has not explored trends in agency use of the critical position  pay authority. OPM has not pursued reasons why agencies have not  requested approval for over 750 available slots or why agencies have  used only 4 of the 36 authorized positions as of calendar year 2015. As  part of an initiative to close skills gaps for the STEM workforce, in October  2014, the White House Office of Science and Technology Policy, OPM,  and OMB identified the critical position pay authority as a potentially  underused flexibility. However, according to the 2015 OPM report, OPM  had authorized critical position pay for 36 positions in 10 agencies as of  calendar year 2015. And, only four of those agencies reported using the  critical position pay authority in 2015 for four current employees (see  table 6).

In July 2017, the Treasury Inspector General for Tax Administration  (TIGTA) recommended that the Internal Revenue Service (IRS) pilot the  use of critical position pay authority to recruit highly-qualified experts to  lead IRS’s cybersecurity and related specialized functions. According to  TIGTA, IRS would enhance its recruitment efforts by using the authority.  OPM officials attribute low use of critical position pay to: (1) agencies’  views that the approval process is cumbersome; (2) management  resistance or cultural issues based on views about pay inequity between  employees, or employees receiving higher salaries than their managers;  and (3) agencies using other compensation flexibilities that do not require  prior OPM approval.

OPM is not tracking government-wide data on the use of the range of  special payment authorities to better understand whether or how various  authorities improve recruitment and retention. OPM officials said the  information they collect on special payment authorities depends on  reporting requirements for the specific payment authority. For example,  they said they collect information on assessing the effectiveness of  student loan repayments because of the reporting requirements in the  law. However, the reporting requirement does not include assessments to  examine effectiveness or impediments to help OPM determine whether  potential changes may be needed to address recruitment and retention  challenges. Instead, OPM’s annual data request memorandums invite  agencies to provide additional details on their experiences in  administering the student loan repayments.

OPM officials said they may sometimes perform ad hoc analyses of EHRI  data on certain authorities but do not regularly analyze EHRI data on the  use of the various authorities government-wide. For example, OPM  officials said they have queried the EHRI database on the use of selected  special payment authorities for cybersecurity employees and found the  numbers of 3R incentives and agencies using them increased from fiscal  year 2015 to 2016, while use of student loan repayments decreased  during that period. However, OPM does not regularly conduct such  analyses on this or other uses of special payment authorities to  understand how they are used to address skills gaps.

By not tracking and analyzing data on the use of special payment  authorities, OPM and the CHCO Council do not have the information they  need to help determine what potential changes may be needed, and have  limited assurance that special payment authorities are helping agencies  meet their needs and achieve recruitment and retention goals.

OPM May Be Missing Opportunities to Promote Strategic Use of Special Payment Authorities

Standards for Internal Control in the Federal Government requires that  agency management design and implement control activities, which are  the actions management puts in place through policies and procedures to  achieve objectives and respond to risks. We have reported on OPM’s  important leadership role and the CHCO Council’s support in assisting  agencies with identifying and applying human capital flexibilities across  the federal government. In its most recent strategic plan, OPM reported  it would lead federal human capital management by partnering with its  stakeholders—including federal agencies—to develop and implement  effective and relevant human resources solutions to build an engaged,  productive, and high-performing workforce and develop effective  compensation packages, among other things. OPM also has  acknowledged its leadership role in strategically promoting the effective  use of at least one special payment authority—student loan repayment— and assisting agencies in the strategic use of this and other recruitment  and retention tools as necessary to attract and retain a well-qualified  federal workforce and support agency mission and program needs.

We have also previously reported on the lack of awareness among  federal managers about using flexibilities to address human capital  challenges. In 2014, we reported that in a forum of CHCO Council  agencies we convened, CHCOs said they wanted OPM to do more to  raise awareness and assess the utility of tools and guidance it provides to  agencies to address key human capital challenges. Accordingly, we  recommended that OPM evaluate the communication strategy for and  effectiveness of relevant tools, guidance, or leading practices created by  OPM or the agencies to help ensure agencies are getting the guidance  and tools that they need. OPM concurred with the recommendation.

OPM does not provide guidance on assessing effectiveness of special  payment authorities in the agency’s handbook on human capital  flexibilities for any of the authorities we reviewed. For example, OPM  does not offer examples of assessments to illustrate what data are  needed and what methodologies are available for determining whether  special payment authorities improve recruitment and retention. OPM has  provided supplemental information on assessing effectiveness in some  student loan repayment authority annual reports and provided links to  those reports on its website, but has not done so for other payment  authorities. OPM officials said that they believe agencies are in the best  position to collect and analyze data to determine which special payment  authorities are effective for addressing recruitment and retention needs at  their agency.

However, we found that CHCO agencies often did not document  assessments for the special payment authorities they used. The  documents agencies prepared were most often focused on justifying or  reporting on use of authorities rather than on evaluating their  effectiveness in improving recruitment and retention. As mentioned  previously, documents addressed compliance with regulations and  justifications that agencies prepared to request approval for using the  authorities.

Our review found examples of data and methodologies that agencies  could use to help assess whether an authority helped improve recruitment  and retention. For example, DOD used data from interviews with  employees hired into its entry-level developmental trainee programs to  gather feedback on student loan repayment. The feedback consistently  indicated that the program was a major contributing factor in employees’  decisions to accept these positions. Also, Interior collected and monitored  data on retention rates to assess the effectiveness of special rates in  retaining its oil and gas workforce. State said that it conducted some  informal assessments of its use of retention incentives but could add a  question to its employee exit survey to collect data on how these  incentives affect attrition. Some CHCO agency questionnaire responses  included examples of other types of data or analyses that could be used  to assess special payment authorities such as (1) the reduced level of  resignations in a department that had experienced staffing shortages; (2)  an increased rate of filling certain hard-to-fill positions; and (3) counts of  the numbers of employees successfully recruited into mission-critical  skills gap areas.

Tools and Guidance to Support Strategic Decisions

OPM does not provide consistent information via tools and guidance to  support effective use of special payment authorities. OPM’s website  guidance for the student loan repayment authority provides agencies with  tools including best practices, sample agency plans, and answers to  frequently asked questions. However, its website guidance for superior  qualifications and special needs pay setting authority, for example, only  has fact sheets which generally restate and reference the related  regulations. Table 7 summarizes the various types of tools and guidance  information on the agency’s website about special payment authorities.

In addition to the tools and guidance noted above, the student loan  repayment website includes links to OPM annual reports which include  details that could support agency use of this authority. In OPM’s annual  requests for data on student loan repayments, OPM regularly invites  agencies to submit information for these reports, including on these  topics: establishing a business case, program impediments, and ways to improve the student loan repayment program.

OPM’s guidance on using special pay authorities to address cybersecurity  skills gaps illustrates how OPM provides useful information which could  be applied in other mission-critical skills areas. In assisting agencies on  ways to combine authorities to hire cybersecurity specialists, the  guidance includes hypothetical scenarios where desirable job candidates  have competing job offers or are currently employed, and provides  example competitive compensation packages for entry-, mid-, and  senior/expert-level employees. Such information could be useful for other  government-wide or agency-identified mission-critical skills gaps or other  positions where agencies face serious recruitment or retention  challenges.

OPM officials said they recognized tension between any effort to promote  use of special payment authorities and OPM’s role of providing oversight  of special payment authorities. OPM officials said the agency promotes  the use of the authorities when agencies seek OPM’s help, rather than  undertaking efforts to more broadly ensure agencies are fully aware of the  potential benefits and innovative ways to use authorities. Further, OPM  has not worked with the CHCO Council to gather and disseminate  illustrative examples of data needed and methodologies to assess the  effectiveness of the authorities.

With guidance to assess effectiveness and consistent tools and guidance  across the range of authorities, OPM and CHCO agencies could more  fully support strategic use of special payment authorities to improve  recruitment and retention across the federal government.

OPM Approval Processes Are Not Fully Documented

Standards for Internal Control in the Federal Government require  management to design and implement control activities through policies  to achieve objectives and respond to risks. Documentation and periodic  review of policies and procedures are important parts of the standards  and are necessary to design, implement, and operate controls effectively.  Documentation provides a means to retain organizational knowledge and  mitigate the risk of having that knowledge limited to a few personnel.  Documentation is also evidence that controls can be monitored and  evaluated. As we previously reported, streamlining administrative  processes is a key practice for effectively using human capital  flexibilities. Since agency officials must view administrative processes  as worth their time compared to the expected benefit to be gained,  perceived burdens and slow approval processes could dissuade them  from seeking approval to use special payment authorities that could  address recruitment and retention needs.

OPM regulations implementing the statutory provisions set forth the basic  criteria for OPM approval of certain special payment authorities, but OPM  does not have documented procedures to guide OPM staff in assessing  agency requests for approval. For example, OPM does not have  documented criteria to assess the sufficiency of the information to support  the request, such as  the soundness of the methodology or reliability of underlying data for  calculating payment amounts, or  the sufficiency of prior agency efforts to recruit and retain employees  without having to resort to additional pay.

OPM officials noted that the complexity and nature of recruitment and  retention difficulties can vary significantly between agencies and the  authority requested. To make decisions about an agency’s request for  approval, OPM officials said they apply the criteria in law, regulations, and  guidance posted on OPM’s website.

Our analysis shows that, since January 2009, OPM generally took 4 to 6  months to make approval decisions on CHCO agency special rates and  critical position pay requests. OPM officials said they have  conversations with agency officials about their views on the process, but  do not have procedures to systematically monitor or evaluate the process,  such as to seek agency feedback on whether the approval processes are  burdensome, complex, and a barrier to wider use. As noted earlier, we  sought feedback on certain agencies’ experiences with OPM’s approval  processes for special payment authorities. Although some had positive  comments, others expressed concerns about the timeliness of the  process, including that the length of the process may lead to missed  opportunities to hire desirable candidates.

The July 2017 Treasury Inspector General for Tax Administration (TIGTA)  report also said that lengthy approval processes for using critical position  pay is a reason for low overall use of the authority. If pursued by IRS, the  approval process would include getting the request cleared internally,  approved by the Secretary of the Treasury and then, in turn, by OPM and  OMB. OPM has not established a time frame within which agencies could  expect a decision from OPM and OMB. OPM officials estimated that it  may take several weeks or up to several months to complete the approval  process, according to TIGTA. As part of its recommendation to IRS,  TIGTA recommended tracking in detail the time and effort to get the  request for approval cleared internally and approved by the Secretary of  the Treasury, OPM, and OMB.

OPM officials said they do not have documented procedures with criteria  for approving use of special payment authorities because the complexity  and nature of the requests vary significantly between agencies and the  authority requested. OPM officials noted that in reviewing applications  they need to be able to take into account relevant and important variables  necessary to make fact-specific and reasonable determinations to help an  agency find the most appropriate solution to its staffing problems. They  said there is no “one-size-fits-all” formula for approving or denying  requests.

However, without documented procedures for assessing requests for  approval, OPM lacks a means to review and assure that approval  processes achieve their objectives. Without such documents, OPM also  increases the likelihood of inconsistent decisions to grant or decline  approval for the use of special pay authorities. Moreover, it also increases  the risk of losing organizational knowledge of the personnel with expertise  in assessing requests. Additionally, by not periodically examining the  procedures, OPM is not well-positioned to consider alternatives for  streamlining the approval process.

To deal with staffing challenges resulting from skills gaps, reduced  budgets, and the upcoming wave of retirements, agencies have  compensation tools at their disposal that can be coupled with other  flexibilities to produce an attractive package for potential and current  employees. CHCO agencies generally reported that special payment  authorities positively contributed to areas such as employee retention,  applicant quality, and ability to meet staffing needs, among others.

OPM has acknowledged its leadership role in strategically promoting the  effective use of at least one special payment authority—student loan  repayment—and assisting agencies in strategic use of this and other  human capital tools. However, OPM has not tracked or analyzed the  government-wide data on agencies’ use of various special payment  authorities to better understand whether or how various authorities  improve recruitment and retention. By tracking and analyzing these data,  OPM could have information it needs to determine what potential  changes may be needed, and have better assurance that special  payment authorities are helping agencies meet their needs and achieve  recruitment and retention goals. Moreover, OPM has not been consistent  in providing guidance on assessing effectiveness of the range of special  payment authorities in attracting and retaining a well-qualified federal  workforce to support agency mission and program needs. Few agencies  are documenting assessments. OPM has not worked with the CHCO  Council agencies to provide illustrative examples of data needed and  methodologies to assess the effectiveness of the authorities. By providing  guidance on assessing effectiveness of these authorities, OPM and  CHCO agencies could be better positioned to know whether use of the  authorities is improving recruitment and retention or what changes might  be needed to improve their effectiveness.

Agency officials may also perceive documentation and approval  processes as time consuming or burdensome barriers to using  compensation tools. Perceived delays or inefficiency in OPM’s approval  processes could discourage agencies from seeking to use Title 5 special  payment authorities that could address recruitment and retention  challenges. OPM also had not documented procedures for assessing the  sufficiency of the information agencies submit to request approval. By  establishing documented procedures and periodically reviewing them,  OPM would increase the likelihood of consistent decisions to grant or  decline agency requests for approval to use these authorities.

We are making the following three recommendations to OPM.

The Director of OPM, together with the CHCO Council, should track  government-wide data to establish a baseline and analyze the extent to  which the seven Title 5 special payment authorities are effective in  improving employee recruitment and retention, and determine what  potential changes may be needed to improve the seven authorities’  effectiveness. (Recommendation 1)

The Director of OPM, together with the CHCO Council, should provide  guidance on assessing effectiveness and tools—such as best practices or  frequently asked questions—for the range of Title 5 special payment  authorities. (Recommendation 2)

The Director of OPM should establish documented procedures to assess  special payment authority requests requiring OPM approval and  periodically review approval procedures to consider ways to streamline  them. (Recommendation 3)

We provided a draft of this report to OPM for review and comment. We  also provided relevant draft report excerpts to CHCO agency officials for  comment in cases where we more extensively reported an agency’s  illustrative examples, or where an agency’s views were more significant in  context of the report. OPM provided written comments, which are  reproduced in appendix V and summarized below. Of our three  recommendations, OPM concurred with one and partially concurred with  the other two. OPM also outlined its planned steps to implement the  recommendations. OPM and CHCO Council agency officials also  provided technical comments, which we incorporated as appropriate.

In response to our first recommendation, OPM partially concurred and  outlined its plans to track data that cover a limited period to analyze  agencies’ use of certain Title 5 special payment authorities. OPM said it  planned to analyze both student loan repayment authority data by  occupation for one calendar year (2016) and the most recently available  data for five of the other six special payment authorities covered in this  report. This includes use for government-wide mission-critical  occupations. While these actions may provide some degree of insight into  the extent to which and how agencies use some of the special pay  authorities, examining only recent and available data will not support  establishing a baseline to measure changes over time, tracking  effectiveness, or determining any changes needed in future years. We  made revisions to the recommendation to clarify the value of tracking data  over time for the seven special payment authorities. OPM stated that  tracking government-wide workforce data available to them will not  provide a complete assessment of the effectiveness of the special  payment authorities because agencies are in the best position to analyze  such information. We agree that agencies have first-hand information on  use of special payments. Agencies also have data that can inform  discussions between OPM and the CHCO Council on potential strategies  for a government-wide approach to enhance strategic use of these  authorities to address mission-critical skill gaps. By working with the  agencies through the CHCO Council, OPM is better positioned to track  government-wide data to analyze the extent to which Title 5 special  payment authorities improve employee recruitment and retention and  determine what potential changes may be needed to improve authorities’  effectiveness.

In response to our second recommendation, OPM concurred and outlined  plans such as issuing guidance with examples of assessments to  illustrate what data are needed and what methodologies are available for  determining whether special payment authorities help improve  recruitment and retention. We believe OPM could also assist agencies by  providing tools or other guidance for the authorities that OPM does not  approve—such as on establishing a business case, best practices,  answers to frequently asked questions, or lessons learned—to help  ensure consistent information is shared with agencies to support effective  use for the range of Title 5 special payment authorities. OPM could also  provide agencies with tools and guidance for other mission-critical skills  areas similar to those shared for addressing cybersecurity skills gaps.  Such tools and guidance could include hypothetical recruitment  scenarios, checklists of required steps, and examples of competitive  compensation packages. OPM stated it would work on any guidance that  the CHCO Council identifies to improve use of special payment  authorities. With consistent tools and guidance across the range of  authorities, OPM and CHCO agencies can be positioned to fully support  strategic use of special payment authorities to improve recruitment and  retention across the federal government.

In response to our third recommendation, OPM partially concurred and  commented that there is no “one-size-fits-all” formula for approving or  denying agency requests. It added that applying a rigid formula could  result in unwarranted disapprovals. OPM also stated that it would  document additional procedures to guide staff in evaluating agency  requests and periodically review the procedures. We believe establishing  documented procedures would guide staff in considering such complex  factors such as the soundness of the methodology and the reliability of  underlying data for calculating payments amounts. Documentation of  policies and procedures is an important part of internal control standards.   By documenting procedures to review requests, OPM will help ensure  consistency in approval decisions and retain organizational knowledge of  personnel with expertise in assessing requests.

As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 14 days from the  report date. At that time, we will are send copies of this report to  appropriate congressional committees, the Acting Director of OPM, and  other interested parties. In addition, the report will be available at no  charge on the GAO Web site at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-2717 or jonesy@gao.gov. Contact points for our offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix VI.

Appendix I: Objectives, Scope, and Methodology

This report (1) describes what is known about how much Chief Human  Capital Officer (CHCO) Council agencies used selected special payment  authorities in fiscal years 2014-2016; (2) assesses the extent to which  CHCO agencies evaluate the effectiveness of these authorities and  identifies challenges, if any, the agencies reported facing in using the  authorities to address mission-critical skills gap areas; and (3) evaluates  how the Office of Personnel Management (OPM) has helped agencies  address federal recruitment and retention needs. We limited our scope to  the seven broadly available special payment authorities generally  available government-wide under Title 5 of the United States Code to  address federal agencies’ recruitment and retention issues: (1) special  rates, (2) recruitment incentives, (3) relocation incentives, (4) retention  incentives, (5) superior qualifications and special needs pay setting, (6)  student loan repayments, and (7) critical position pay.

To describe what is known about how much CHCO Council agencies  used selected special payment authorities in fiscal years 2014-2016, we  developed and administered a questionnaire to the 27 CHCO agencies to  collect their fiscal years 2014-2016 data—to the extent available—on  frequency of use, dollars spent, and whether they used the authorities to  help address recruitment and retention needs in mission-critical skills gap  areas. All 26 CHCO agencies that reported use of the authorities  responded to our questionnaire. We asked agencies to not report  information related to agency-specific or non-Title 5 authorities. In our  report, we use the aggregate CHCO agency reported data by authority.  Federal employees may receive compensation under more than one  authority in a given fiscal year, and in these instances would be counted  for each authority received. For example, an employee who received a  recruitment incentive and student loan repayments in the same fiscal year  would be counted once for each authority in that year. We did not verify  the amounts agencies reported spending.

In addition, we used CHCO reported data to determine the total use of  these authorities and OPM Enterprise Human Resources Integration  (EHRI) personnel data, which contains personnel action and workforce  data for most federal civilian employees, to identify the approximate  percentage of employees who received at least one of these seven  authorities in fiscal year 2016. In calculating the percentage, we used  CHCO agency reported data for the numerator and OPM EHRI data for  the total number of federal employees at the 26 CHCO agencies—as of  September 30, 2016—for the denominator.

We also analyzed OPM EHRI personnel data for fiscal year 2014 to  describe the government-wide use of certain authorities by occupational  family. To do so, we calculated the number of unique employees who  received a certain authority in each fiscal year. We included federal  employees on permanent and nonpermanent appointments, and all work  schedules (seasonal, nonseasonal, intermittent, and full-time and part- time). Individual employees who switched occupational families during a  fiscal year could be counted more than once if they received a special  payment authority under both occupational families. We primarily relied  on the following EHRI data variables to describe agencies’ use of certain  authorities:

Special rates: We used the “pay rate determinant” to identify  employees who were receiving a special rate as of the end of the  applicable fiscal year, and then used the “special pay table identifier”  to limit our analysis to special rates authorized under 5 U.S.C § 5305.  OPM officials provided a list of all authorized Title 5 special rate tables  active during the fiscal years included in our review.

3R incentives: We used the “legal authority” and “nature of action”  codes to identify employees for whom 3R incentives were authorized  during the fiscal year.

Superior qualifications and special needs pay setting: We used  the “pay rate determinant” and “nature of action” codes for new  appointments to identify the number of employees who had received a  superior qualifications and special needs pay setting authority during  the fiscal year.

We reviewed OPM documentation, including OPM’s Guide to Data  Standards—the guidance document that describe data elements in  EHRI—to identify the specific codes used to designate employees who  had received these authorities.

We also analyzed OPM calendar year 2015 reports—the most recently  available at the time of our review—on the student loan repayment  authority and the critical position pay authority to describe agencies’ use  of these two authorities by occupation. For the student loan repayment  authority, we calculated the top occupations series that received this  authority government-wide. We aggregated the 18 engineering-related  occupations into one engineering series. In addition, for the agencies  that most frequently used the authority, we calculated the approximate  percentage of occupations that received the authority that were identified  as mission critical by these agencies as part of OPM’s and the CHCO  Council’s initiative to close skills gaps.

To assess the reliability of the CHCO agency reported data and OPM  data, we compared frequencies from the various data sources by agency  for fiscal year 2014 (the one year of available overlapping data); reviewed  OPM documentation; and interviewed OPM officials. We determined that  the data were sufficiently reliable to present agency use of special  payment authorities over this time period.

To assess the extent to which CHCO agencies evaluate the effectiveness  of special payment authorities and to identify challenges they reported  facing in using the authorities, in our questionnaire to agencies we asked  about their views on the impacts of each authority used in fiscal years  2014-2016. We analyzed and summarized closed-ended question  response data agencies reported on authorities’ impacts on agency  operations, including the extent of positive or negative effects in areas  such as employee retention, applicant quality, and ability to achieve the  agency mission. We also asked whether and how they assessed each  authority’s effectiveness. We summarized closed-ended question  response data on whether agencies had done documented, informal, or  no effectiveness assessments of authorities in impact areas such as  agency mission, meeting staffing needs, or addressing mission-critical  skills gap areas. We contacted the 10 agencies that reported having  documented assessments for one or more authorities to request copies of  them. Nine agencies provided requested documents. We analyzed the  documents to determine the type of information they provided, including  whether they had information on how use of the authority had been  effective in the impacts the questionnaire asked about. To learn more  about agencies views on authorities’ effectiveness, we also asked an  open-ended question for agencies to provide examples of how authorities  helped address mission-critical skills gaps. We reviewed the narratives  agencies provided to identify and report examples appropriate to illustrate  the various effects agencies reported.

We also asked agencies about their views on any challenges they  experienced in using special payment authorities and potential changes  to operations or procedures to help improve effective use of authorities.  We analyzed and summarized the closed-ended question response data  agencies reported on how often they experienced certain challenges,  including insufficient resources, management resistance, burdensome  documentation, and complex approval process. For the two most  common challenges agencies reported other than insufficient resources— burdensome documentation and the complex approval process—we  followed up with the three agencies that reported regularly or always  experiencing both challenges. Two agencies responded. We also asked  an open-ended question for agencies to provide narrative examples of  how they identified and responded to challenges in using these  authorities. We analyzed the content of the narrative responses to identify  and report examples appropriate to illustrate various challenges and  responses to challenges agencies reported.

To learn more about agencies’ experiences with OPM’s approval  processes for special payment authorities, we analyzed OPM’s data on  agency requests to use the special payment authorities that OPM  approves. In addition to our CHCO agency questionnaire response follow- up, we contacted selected agencies that OPM data identified as having  requested approval to use a special payment authority since 2009. We  asked seven agencies to provide narrative of their views on such topics  as what worked well, challenges experienced, and any suggestions for  improving the process. To provide an opportunity to learn how approval  processes could affect agency decisions to not seek such approvals, we  included two agencies—EPA and HHS—that had not made such  requests to ask for narrative explanations of why they had not sought  such approvals. All agencies provided their views. We analyzed  agencies’ narrative responses to illustrate examples of the experiences  agencies reported.

We also analyzed and summarized the closed-ended question response  data agencies reported on how likely potential changes would improve  use of special payment authorities. We followed up with five agencies that identified the three most common potential changes that would very likely  or certainly improve their ability to effectively use special pay authorities— changes to training for agency managers, training for agency human  resources employees, and OPM regulations. We asked them to provide  narrative descriptions of changes they had in mind and how changes  would improve their agency’s effective use of special payment authorities.  Four agencies responded. We reviewed the narratives agencies  provided to identify examples appropriate to illustrate the various views  on potential changes agencies reported.

To evaluate how OPM has helped agencies address federal recruitment  and retention needs, we interviewed OPM officials and reviewed OPM’s  procedures to collect and analyze data on agency use of special payment  authorities, including through automated systems (EHRI) and information  requests and reporting. We reviewed the procedures to assess whether  OPM tracks data to assess the level and effective use of the payment  authorities to improve recruitment and retention. We also reviewed and  summarized the various ways OPM provides agencies information on  special payment authorities, including through OPM’s memorandums,  opm.gov website tools and guidance on each special payment authority,  and guidance for using special payment authorities to address  cybersecurity skills gaps. We compared the types of information and  consistency of the various ways OPM provides information to promote the  strategic use of special payment authorities to include supporting agency  effectiveness assessments and increased awareness and strategic  decision making on the use special payment authorities. We reviewed  procedures to collect information on the use of critical position pay  authority and a July 2017 Treasury Inspector General for Tax  Administration report on the topic. We also interviewed OPM officials and  reviewed available documents on OPM’s processes to review and  approve agencies’ requests to use certain special payment authorities,  and analyzed OPM data to determine the average months it took OPM to  make approval decisions on CHCO agency requests received from  January 2009 through January 2017. We compared OPM’s procedures  for collecting, analyzing, and providing information on the effective,  strategic use of special payment authorities, and its procedures for approving use of special payment authorities, to criteria identified in our  related reports on federal human capital management and in Standards  for Internal Control in the Federal Government, including standards that  agency management design and implement controls and document  procedures.

We conducted this performance audit from September 2016 to December  2017 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

Appendix II: Special Payment Authorities Questionnaire Sent to Chief Human Capital Officer Agencies

1.  Mission critical skills gaps are one or more of the following and may  impede the federal government from cost-effectively serving the public  and achieving results:  staffing gap in which an agency has an insufficient number of  individuals to complete its work; and/or a  competency gap in which an agency has individuals without the  appropriate skills, abilities, or behaviors to successfully perform  the work.

Mission critical skills gaps may be identified broadly as affecting  several agencies or may be specific to a given agency (such as  mission-critical occupations agencies have identified to the Office of  Personnel Management (OPM) for skills gap closure).

Section 2: Use of Special Pay Authorities at Your Agency

1.  For the special pay authorities below, does your agency have agency- specific guidance (including documented policies or plans) on the use  of the special pay authorities below? (Check all that apply) agency  level(s)

2.  In the last three fiscal years (2014-2016), how many federal  employees in your agency received compensation under the following  special pay authorities? (if none, enter zero) (FY 2014) (FY 2015) (FY 2016)

3.  In Fiscal Years 2014-2016, what was your agency’s total spending (in  dollars) for the following special pay authorities?

4.  In the last three fiscal years (2014-2016), how often has your agency  experienced the following challenges related to using special pay  authorities?

5.  In your opinion, how likely would changes in the following areas  improve your agency’s ability to effectively utilize special pay  authorities at your agency?

Instructions: If your agency utilized  during FY2014-2016,  please complete this section, otherwise continue onto the next Section.  1.  In Fiscal years 2014-2016, did your agency use  to  support the following mission critical skills gap areas? at my agency  (not mission  critical)

2.  Does your agency assess the following to determine the effectiveness  of using ?

3.  In your opinion, how has the use of  impacted the  following?

Section 10: Agency- specific Examples of Special Pay Authorities Use

1.  In what ways have special pay authorities helped your agency to  successfully address mission critical skills gaps? (Please provide at  least one specific example)  2.  In what ways has your agency identified and responded to challenges  related to the use of special pay authorities? (Please provide at least  one specific example)

Appendix III: CHCO Agencies Reported Use of Special Payment Authorities Affecting Selected Areas of Operation

The following six tables present data on the responses reported by CHCO  agencies on the impacts on selected areas of operation from using the  following special payment authorities—superior qualifications, critical  position pay, recruitment incentives, retention incentives, relocation  incentives, and student loan repayment.

Appendix IV: Office of Personnel Management Data on Use of Special Payment Authorities by Occupational Family

Our analysis of OPM data found that, overall, agencies used five special  payment authorities—special rates; superior qualifications and special  needs pay setting; and the recruitment, relocation, and retention (3R)  incentives—to varying extents for different occupational families. When  we analyzed OPM data to identify the top five occupational families for  each of these five special payment authorities, we found certain  occupational families appeared among the top groups for multiple  authorities (see those highlighted in table 14). Specifically, we found that  two occupational families—(1) Medical, Hospital, Dental, and Public  Health; and (2) Engineering and Architecture—were among the top five  families for four and five of these special payment authorities,  respectively. The Medical family was the top occupational family for four  of the five authorities—superior qualifications and special needs pay  setting, and the 3R incentives. Further, we found that certain occupational  families were among the top five for one or two authorities but not for the  other authorities. For example, the Information Technology and  Copyright, Trademark, and Patent occupational families were among the  top five families for special rates and superior qualifications and special  needs pay setting, but not for the other three authorities.

Appendix V: Comments from the Office of Personnel Management

Appendix VI: GAO Contact and Staff Acknowledgements

Yvonne D. Jones, Director, (202) 512-2717 or jonesy@gao.gov.

In addition to the contact named above, Signora May, Assistant Director;  Ronald W. Jones, Analyst-in-Charge; Melinda Cordero, Ann Czapiewski,  Sara Daleski, Christopher Falcone, Karin Fangman, Kerstin Hudon, John  Hussey, Steven Putansu, Alan Rozzi, and Albert Sim contributed to this  report.

Federal agencies can tap an array of incentives when they need to recruit or retain experts in cyber security, engineering, or some other in-demand field.

Seven special payment authorities allow agencies to pay higher wages, help pay off student loans, and offer other incentives.

We found that less than 6% of employees received special payments. Agencies reported that incentives were helpful, but few documented their impacts, and the Office of Personnel Management has not assessed their effectiveness.

We recommended that OPM track incentive impacts, identify needed improvements, and guide agencies on assessing effectiveness.