Once again, we are pleased to have the full cooperation, as we have had in the past, of the administration and our distinguished witnesses.

I certainly join with you, Mr. Chairman, in welcoming them. [The prepared statement of Senator Percy follows:]

PREPARED STATEMENT OF SENATOR CHARLES H. PERCY

Mr. Chairman, this morning the Committee on Governmental Affairs has before it a uniquely significant task. As of September 30, 1977, the Federal government employed 2.8 million civilian employees, some 2 million of whom fall within the Civil Service merit system. They constitute the core group responsible for making government programs, policies, services, and activities work. For government to be effective in accomplishing goals set for it by the people of this country through the Congress, it is necessary that each of those 2 million civil servants works effectively. The attitudes, morale, motivations, career satisfaction, and qualifications of the men and women who staff the various Federal Departments and agencies are the single most important determinants of whether this government will function as an effective, efficient provider of services to its constituents. The legislative package this Committee has before it this morning to revamp the Federal Civil Service system speaks to this very question.

There is no doubt in my mind but that the personnel management structure of the Federal government has placed many hurdles in the way of efficient functioning of the Federal government. A series of complex procedures has evolved over the past 95 years since original passage of the Pendleton Act in 1883 which govern the manner in which Federal employees are hired, promoted, rewarded, and transferred, as well as removed. These procedures, in many cases, caused agency managers to become more preoccupied with the form and paperwork of running their programs than with the actual substance of the programs themselves. Currently, the statutes, rules, regulations, and procedures governing Federal personnel management fill many volumes. The end result, in the eyes of many people, has been a general stagnation in government.

It is clear to me that the time has come to untangle the web of rules and regulations that constitute our Civil Service system to make procedures simpler, more responsive, and to create a work environment better suited to bring out the best in each of those 2.8 million people who are the Federal government. For this reason, I have chosen to be a Senate co-sponsor of President Carter's "Civil Service Reform Act of 1978," and have pledged myself to seeking the highest possible priority in processing this legislative package through the 95th Congress. The people of this country have mandated such reform time and again, and we as elected legislators have a responsibility to be responsive to that mandate.

Because there is little in this Civil Service Reform package that will not directly affect the lives or careers of many individuals, many of the specific proposals have become quite controversial. As the Committee reviews these detailed reform proposals over coming weeks, however, there is one question that we must have paramount in our minds-will they work to make the government work better? Will they serve the essential function of better motivating Federal employees to do their jobs in a manner that will better serve the taxpayers who ultimately pay their salaries?

Civil Service reform is not simply an intramural affair of interest only to the Federal governmental community. Every citizen has an interest in this legislative reform. Even the most well intentioned and progressive government initiatives cannot work if the governmental structure supporting those initiatives is inadequate.

With the active cooperation of all parties, I believe this Committee can satisfactorily work out the various conflicting views surrounding this legislative package, and report to the full Senate a proposal that will work and that will accomplish the goals set out for it. This will be a difficult task, but this Committee has dealt with difficult issues before, and has a track record in which we can all take satisfaction. Thank you, Mr. Chairman.

Chairman RIBICOFF. Senator Stevens?

OPENING STATEMENT OF SENATOR STEVENS

Senator STEVENS. Thank you, Mr. Chairman. I wish to take just a moment to express my appreciation for the leadership you have

demonstrated in quickly organizing these hearings. The committee's schedule has progressed to legislation which would affect the President's Second Reorganization Plan of 1978.

The proposed Civil Service Reform Act would make sweeping changes to the Federal personnel system. The bill recommends substantial change to managerial organization and procedures.

Revisions in the appeals process would affect all employees not covered by a separate contractual agreement. The administration proposes increased opportunities for women and minorities at the expense of veteran's preference. I sent a staff member to Alaska for the purpose of assessing Federal employee opinion on the Reform Act. Alaska has one of the Nation's highest proportion of Federal employees per capita. Public opinions are mixed. However, there is one opinion generally held in the Federal family. Most employees feel that something should be done to improve effectiveness and moral in the career service.

This committee must strongly test the value and workability of the proposed Reform Act. Some Federal employees are greatly concerned about a possible loss of appeal rights. Many feel the loyal veteran is being short-changed in reform tradeoffs. We must be assured that any new segment of the career service is appropriately protected from politicization.

State and local governments could be affected by this legislative proposal. Therefore, we must carefully evaluate changes to both the Intergovernmental Personnel Act and revisions in Federal grant-in-aid requirements. Very little public attention has been focused on these proposals.

I am confident that we will receive testimony responding to these concerns. We should not have to sacrifice civil service rights for management improvements. We should support the valuable contributions in this proposal and reject questionable recommendations. I would like to see this committee recommend a good, viable Reform Act to the Senate. These hearings will significantly affect the realty of that event.

Chairman RIBICOFF. Senator Sasser?

OPENING STATEMENT OF SENATOR SASSER

Senator SASSER. Mr. Chairman, I am pleased that you have scheduled these hearings to give us a chance to examine this complicated bill carefully.

As a cosponsor, I want to state from the outset that I am supporting the President's efforts to reform the bureaucracy. I think legislation is long overdue, and I look forward to the coming weeks and months as Congress and the President work out these proposals.

Throughout our work, we should remember that the purpose of this effort is to give more meaningful merit protection to career employees, to make the Federal personnel system more efficient, to cut unnecessary costs, and to eliminate administrative red tape. These are not new issues or goals, but to succeed, we will have to face them squarely and make the sometimes hard decisions.

Mr. Chairman, although the Governmental Affairs Committee. only received jurisdiction for civil service matters 15 months ago, I

think we can take pride in Congress role in civil service reform and the legislation we have before us.

Beginning last May, in the confirmation hearings of Chairman Campbell and Commissioners Sugarman and Poston, we have raised the issues that are now before us in S. 2640. In those confirmation hearings, I raised particularly the subject of protection for civil servants from merit abuses. The President has responded by proposing a merit system protection board. I am sure we will discuss the strengths and weaknesses of that proposal in the weeks ahead.

I raised the question of the lack of opportunities in our Federal Government for women and minorities. We see in the President's legislation sections to make equal opportunity a reality.

The commissioners were asked about the dual function of the Civil Service Commission, and whether those functions should be split. This legislation, and the reorganization plan we will soon have, places the administrative and personnel functions of the Commission into a new Office of Personnel Management.

I raised the subject of flexible and part-time work schedules for Federal employees, and this legislation gives the Office of Personnel Management the authority to test such new ideas.

I raised the question of lengthy and often wasteful appeals procedures, which often did not help those who were in the right but allowed those who were in the wrong to tie up their superiors in mounds of paperwork and months of proceedings. This legislation shortens the appeals process.

One of the most important questions in those confirmation hearings dealt with protections for whistle-blowers. The administration has responded to this concern, also. I might add that we will have a full day of hearings on this subject, where I expect we will hear some suggestions for strengthening even further these protections. I raised the issue that many Federal employees consider the current Executive order governing labor management relations to be inadequate. Also, many employees feel the current administrative machinery for labor-management relations is too management oriented. We now have a proposed independent Federal Labor Relations Authority, and we have a commitment from the President to work toward legislation regarding Federal labor-management relations.

I should add also that in some cases we did not wait for the administration to act. I am particularly pleased that the first bill out of my Civil Service Subcommittee-a bill which is now lawstrengthened the merit concept by repealing the apportionment requirement. This requirement had allowed appointments to be made on the basis of geography instead of merit, and it tied up the Civil Service Commission in needless paperwork and regulations. Mr. Chairman, in the barrage of publicity and attention the particulars of this bill have been getting the past few weeks, we should not lose sight of the goals I mentioned at the outset. Civil service reform should streamline Government and let us make better use of the human resources we have. We should reduce the paperwork burden and eliminate costly and inefficient requirements. We should give managers the authority they need to

manage, and we should give Federal employees every protection against being subjected to undue political pressure on the job.

I certainly don't think these goals are impossible to reach, or that they are hopelessly at odds with each other. I know this committee plans to listen carefully to the witnesses and work with the administration toward these goals, and I look forward to the weeks ahead. Chairman RIBICOFF. Senator Javits.

OPENING STATEMENT OF SENATOR JAVITS

Senator JAVITS. Mr. Chairman, I am pleased to have joined with you in sponsoring this legislation which the President has sent to us with great expectation, and with great determination to reshape our Federal executive establishment. His reform effort in this field has been ambitious and extraordinary. Indeed this bill does have the potential to revolutionize the way that the Government manages its civilian work force of 2.8 million men and women.

There are several delicate and complex questions involved in this legislation which our committee must explore carefully, including the extent to which, if any, changes in the civil service merit system would increase political control of the bureaucracy, the effect of the bill on the veterans' preference system and the proposed changes in Federal labor-management relations.

Nevertheless, the proposals-S. 2640 and Reorganization Plan No. 2 of 1978-represent a significant and timely opportunity to improve the responsiveness of our National Government. There is no question that the civil service system has become weighted down with rules and regulations that cause delay, mismanagement, and at times lack of direction, control, and leadership by senior political appointees-managers and employees alike. I am confident that this committee will approve legislation designed to reform that system in major respects. I commend the President, Mr. Campbell, and Mr. McIntyre for their excellent work on this difficult issue.

Chairman RIBICOFF. Mr. McIntyre?

TESTIMONY OF JAMES T. MCINTYRE, JR., DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, ACCOMPANIED BY WAYNE GRANQUIST, ASSOCIATE DIRECTOR: ALAN K. CAMPBELL, CHAIRMAN: JULE SUGARMAN; AND ERSA H. POSTON, U.S. CIVIL SERVICE COMMISSION

Mr. MCINTYRE. Thank you, Mr. Chairman.

Mr. Chairman, members of the committee, I am pleased to have the opportunity to appear before you in support of S. 2640, the administration's proposal for comprehensive reform and reorganization of the Federal civil service system.

I have with me today from the Office of Management and Budget, Mr. Wayne Granquist, one of our associate directors who worked with Chairman Campbell and the members of the special task force that put together the legislation and the proposed reorganization plan relating to the reform and reorganization of the Federal Civil Service Commission.

And I would like, Mr. Chairman, at the appropriate time, for Mr. Granquist to be able to assist in answering the questions that the committee might have.

I also have a prepared statement that I would like to submit for the record.

Chairman RIBICOFF. Without objection, the entire statement will go in the record at the conclusion of your testimony.

Mr. MCINTYRE. One of our major goals is to revitalize the management of Government programs so that we can provide more efficient and responsive services to the American people.

It is our opinion that to accomplish this goal, we must make fundamental changes in our Federal personnel system which has become a bureaucratic maze-stifling the initiative of dedicated Government employees while at the same time inadequately protecting their rights.

The President made this point quite directly in his state of the Union address. At that time, his detailed message to the Congress also enunciated the basic purposes of this legislative proposal. I would like to briefly reiterate those.

First, to restructure the institutions that run the civil service; second, to increase safeguards against abuses of official power; third, to provide greater incentives for managers to improve the Government's efficiency and responsiveness; fourth, to reduce the system's redtape and delays; fifth, to speed the procedures for dealing with employee grievances and disciplinary actions; and sixth, to make equal employment opportunities more effective.

As you know, today, there is widespread disenchantment with the civil service system. A majority of the public believes that Federal workers are inefficient, underworked, and overpaid.

I would point out, however, that I don't share this view-and neither does the President and other senior officials of this administration.

However, we do recognize that the breadth, depth and intensity of this disenchantment are not totally without justification-for there are some serious problems with our civil service system.

Thus, the provisions of this legislation, S. 2640, are intended to make a major contribution to improving the effectiveness, efficiency and responsiveness of our Federal workers and, in turn, to demonstrate to the American people that they need not tolerate anything less than the very best in performance and service.

I would also like to note that these reform proposals were developed with the direct involvement of more than 100 civil servants-

Chairman RIBICOFF. Who are these 100 civil servants who have cooperated with you and how were they chosen?

Mr. MCINTYRE. I will be glad to have Mr. Granquist and Mr. Campbell mention that, but basically they came from the various departments of the Government. They did include personnel officers. We do have a list that we could make available to the committee of these individuals by name.

Chairman RIBICOFF. I think it would be wise to have that by name and rank in the permanent record.

Mr. GRANQUIST. The director of the task force was Dwight Ink; a retired Federal civil servant himself who took leave from his post