Reforming the Federal Bureaucracy

A new report highlights problems in running an efficient federal government. Some of its proposed changes would directly impact federal employees’ pay and benefits.

A former director of the Office of Personnel Management (OPM), Donald Devine, has authored a report entitled Reforming the Federal Bureaucracy: Challenge and Opportunity. It has been published by the Heritage Foundation.

The report is available at the end of this article. It is summarized here because of its direct potential impact on the federal workforce.

While the report may be influential within the administration, and may be intended as a road-map for change within the federal government, many of the problems it identifies would require Congressional action.

With Democrats in the majority of the House of Representatives in the next Congress, it would require a significant change in philosophy for the conditions addressed in this report to lead to these legislative changes in the House. OPM and other agencies could address some of the problems without Congressional action.

Conclusion of the Report

The report concludes the federal civil service does not live up to its performance-based goals. Using criteria including knowledge, skills and abilities (KSA’s) are no longer used for finding new federal employees or as a basis for promotion.

At the same time, pay and benefits for comparable work are substantially higher than in the private sector.

Finally, keeping a federal job is not based primarily on performance and unacceptable performance is often tolerated as very few federal employees are removed.

Current System Protects Incompetent Employees

The federal merit system consists of principles and practices designed to ensure that merit, rather than politics or personal favoritism, is the basis for running the federal civil service system.

The report states that the merit system was intended to reward expertise and minimize partisan political pressure. Instead, it now insulates federal employees from accountability. The current version of a merit system makes it difficult to fire all but the most incompetent people, and complying with arcane rules has replaced the goal of cultivating competence and expertise.

The report also states that “Agency payrolls are laden by federal employees who are paid more than they could earn in the private sector.”

The solution will depend on politicians to correct the current system. Major political change will not be accomplished by career employees.

How the System Evolved

At the end of the Carter presidency, the Department of Justice and OPM stopped using civil service examinations as a basis for selecting new employees because minorities did not score highly. Carter administration officials eliminated using the exams for hiring new employees through a consent agreement.

The agreement was to last five years. The agreement still controls federal hiring and now has been applied to all KSA tests.

The result has been that instead of selecting employees based on test results, the system has resulted in managers resorting to subterfuge – including preselecting friends or associates they believe will be competent in order to try and hire qualified federal employees. This is sometimes derided by federal workers as the “good ole boy” system.

The report urges OPM to move out with implementing entrance exams again in order for the government to be able to hire more competent people than is being done under the current system.

The Importance of Performance Appraisal

Identifying the best performers is necessary to have an effective performance appraisal system. But “the collegial atmosphere of a bureaucracy in a multi-faceted appraisal system open to appeals makes this a very challenging ideal to implement successfully.”

Attempts to change the system have failed. According to the Government Accountability Office, in 2016 99.6 percent of federal workers were rated fully successful or above. Only 0.3 percent were rated as minimally successful, and 0.1 percent were rated unsuccessful.

Under the current system, managers can be accused of racial or sex discrimination for issuing a poor rating. Informing others they are doing a poor job is difficult. The result is there is little honesty in performance ratings.

In the federal government, pay is still based largely on seniority rather than competence. Efforts to implement a performance-based system were attempted but ultimately expired and were not renewed. “[L]ed by Representative Steny Hoyer (D) of government employee-rich Maryland, stoutly resisted (an) extension of pay-for-performance and, with strong union support, blocked OPM administrative pay reforms through the congressional appropriations process.”

Role of Multiple Appeal Systems

There are multiple administrative appeal systems for federal employees who may be fired. These include: the Merit Systems Protection Board (MSPB); the Federal Labor Relations Authority (FLRA); the Office of Special Counsel (OSC); and the federal division of the Equal Employment Opportunity Commission (EEOC).

In many cases, a fired federal employee can appeal to multiple forums. Forum shopping to have one chance of having a decision over-turned is a common practice. Those who file frequent complaints or appeals do not face any consequences for frivolous complaints. “[T]ime and paperwork necessary to remove a single employee lead managers to turn their heads in all but the most egregious cases of poor performance or misconduct. If malfeasance can be ignored, the incentives to ignore it are very strong.”

A better system, concludes the report, would be to have one avenue of appeals. A consolidation would combine the MSPB, FLRA, OSC, and the federal division of EEOC into a single agency – perhaps built around the MSPB as was largely done under the Civil Service Commission prior to 1978.

Reduce Compensation of Federal Employees

While official government studies (i.e., the Federal Salary Council) conclude that federal employees are underpaid, most outside studies find the reverse: Federal employees earn much more.

A 2016 study by Heritage Foundation experts of federal pay and benefits found federal are paid 22 percent higher than similar private sector employees. When employee benefits are added, the total compensation premium increased to between 30 percent and 40 percent.

Career federal employees have very generous retirement benefits. Federal employees retire earlier, often at 55 after 30 years, have generous pension annuities, and receive automatic cost-of-living adjustments (COLAs). Defined-benefit federal pensions are indexed for inflation.

Managing in a Union Environment

The report states that “The greatest obstacle to promoting accountability to political leadership and promoting expertise in the career civil service is public-sector unions.”

It notes that, unlike private sector unions which have built-in limitations as a union agreement can put a company out of business, similar restraints do not apply in the federal government. The report contends that federal employee unions often “dictate substantial aspects of bureaucracy management under both political parties and under both expert and Cabinet-oriented administrations.”

The report says it is questionable whether public-sector unions are appropriate in government. “The bipartisan consensus up until the middle of the 20th century held that these unions were not compatible with our form of government. After over half a century of experience with public-sector unions, it is hard to avoid this conclusion.”


The report concludes:

If the political interests continue to expect extensive social welfare programs and continue to force Congress and the President to act directly on all manner of societal problems, the federal bureaucracy will continue to be overwhelmed.

Reforming the Federal Bureaucracy


About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47