Order Code RL31500
Report for Congress
Received through the CRS Web
Homeland Security:
Human Resources Management
Updated May 15, 2003
Barbara L. Schwemle
Analyst in American National Government
Government and Finance Division
Congressional Research Service ˜ The Library of Congress

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Homeland Security: Human Resources Management
Summary
P.L. 107-296, Homeland Security Act of 2002 (H.R. 5005), authorizes the
Secretary of Homeland Security and the Director of the Office of Personnel
Management (OPM) to establish, and from time to time adjust, a human resources
management (HRM) system for some or all of the organizational units of the new
Department of Homeland Security (DHS). The law states specific requirements for
the HRM system. Federal workforce improvements to be applied governmentwide
also are authorized by P.L. 107-296. On April 1, 2003, Secretary of Homeland
Security Tom Ridge and OPM Director Kay Coles James announced that they were
launching the process for designing a new human resources management system for
the Department of Homeland Security. A design team and a senior review committee
will work to create the new system and will advise the secretary and the director.
Implementation of the new system is targeted to begin by the end of 2003, according
to a DHS fact sheet.
Key issues to be considered in establishing an HRM system for the new
department might include staffing requirements and hiring and pay systems. Other
issues likely to be considered would include the kind of automated human resources
and payroll systems the various agencies proposed for transfer to the new department
currently have and how those systems might be merged if a consolidation of HRM
services were to occur.
This report discusses the provisions of P.L. 107-296 as they relate to human
resources management. It does not discuss provisions of the law which relate to
labor management relations and collective bargaining.

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
P.L. 107-296, Homeland Security Act of 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Establishment of Human Resources Management System . . . . . . . . . . . . . . 1
Requirements for the HRM System . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Limitations Relating to Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Provisions Relating to Appellate Procedures . . . . . . . . . . . . . . . . . . . . . 3
Sunset Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Effect on Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Sense of the Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Federal Workforce Improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Agency Chief Human Capital Officers . . . . . . . . . . . . . . . . . . . . . . . . . 4
Reforms Relating to Federal Human Capital Management . . . . . . . . . . . . . . 6
Inclusion of Agency Human Capital Strategic Planning in
Performance Plans and Program Performance Reports . . . . . . . . . 6
Reform of the Competitive Service Hiring Process . . . . . . . . . . . . . . . . 6
Student Volunteer Transit Subsidy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Academic Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Implementation of the Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Human Resources Management at Selected Agencies Being Transferred . . . . . 12
Issues for Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

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Homeland Security:
Human Resources Management
Introduction
President Bush signed the Homeland Security Act of 2002 on November 25,
2002 and it became P.L. 107-296.1 The law includes several provisions related to
human resources management, including those which authorize a human resources
management (HRM) system for the Department of Homeland Security and federal
workforce improvements to be applied governmentwide.
This report discusses the provisions of P.L. 107-296 as they relate to human
resources management.2 It does not discuss provisions of the law that relate to labor
management relations and collective bargaining.3
P.L. 107-296, Homeland Security Act of 2002
Establishment of Human Resources Management System4
Title VIII, Subtitle E, Section 841 of P.L. 107-296 amends Title 5 United States
Code by adding a new Chapter 97 — Department of Homeland Security to Part III,
1 For a legislative history, see CRS Report RL31645, Homeland Security Act of 2002:
Legislative History and Pagination Key, by Sharon S. Gressle. See also CRS Report
RS21366, Department of Homeland Security: Organization Chart, by Sharon S. Gressle.
2 For legal analysis of this issue, see CRS Report RL31548, Homeland Security Department
Proposals: Scope of Personnel Flexibilities, by Thomas J. Nicola. For discussion of other
issues surrounding establishment of the department, see CRS Report RL31493, Homeland
Security: Department Organization and Management-Legislative Phase, by Harold C.
Relyea (hereafter referred to as CRS Report RL31493); CRS Report RL31751, Homeland
Security: Department Organization and Management-Implementation Phase, by Harold C.
Relyea; CRS Report RL31492, Homeland Security: Management Positions for the New
Department, by Henry B. Hogue; CRS Report RL31677, Filling Presidentially Appointed,
Senate-Confirmed Positions in the Department of Homeland Security, by Henry B. Hogue.
3 For discussion of these issues, see CRS Report RL31520, Collective Bargaining and
Homeland Security, by Jon O. Shimabukuro; and CRS Report RS21268, Homeland
Security: Data on Employees and Unions Potentially Affected, by Gail McCallion.
4 The provisions under establishment of human resources management (HRM) system were
Section 761 of H.R. 5005 as reported on July 24, 2002 and as passed on July 26, 2002 in the
House of Representatives. They were not included in S. 2452 or in the Lieberman
amendments in the nature of substitute to H.R. 5005. H.R. 5710, as passed by the House of
Representatives on Nov. 13, 2002, included the HRM provisions at Section 841. Sen. Fred
Thompson’s substitute amendment (S.Amdt. 4901) to H.R. 5710, adopted by the Senate on
Nov. 19, 2002, also included the provisions at Section 841.

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Subpart I. The new §9701(a) provides that notwithstanding any other provision of
Part III, the Secretary of Homeland Security may, in regulations prescribed jointly
with the Office of Personnel Management (OPM) Director, establish, and from time
to time adjust, an HRM system for some or all of the organizational units of the
Department of Homeland Security.
Requirements for the HRM System. The HRM system must be flexible
and contemporary. It cannot waive, modify, or otherwise affect:
! the public employment principles of merit and fitness at 5 U.S.C.
2301, including the principles of hiring based on merit, fair
treatment without regard to political affiliation or other non-merit
considerations, equal pay for equal work, and protection of
employees against reprisal for whistleblowing;
! any provision of 5 U.S.C. 2302 relating to prohibited personnel
practices;
! any provision of law referred to in 5 U.S.C. 2302(b)(1)(8)(9); or any
provision of law implementing any provision of law referred to in 5
U.S.C. 2302(b)(1)(8)(9) by providing for equal employment
opportunity through affirmative action; or providing any right or
remedy available to any employee or applicant for employment in
the civil service;
! Subparts A (General Provisions), B (Employment and Retention), E
(Attendance and Leave), G (Insurance and Annuities), and H
(Access to Criminal History Record Information) of Part III of Title
5 United States Code; and Chapters 41 (Training), 45 (Incentive
Awards), 47 (Personnel Research Programs and Demonstration
Projects), 55 (Pay Administration), 57 (Travel, Transportation, and
Subsistence), 59 (Allowances), 72 (Antidiscrimination, Right to
Petition Congress), 73 (Suitability, Security, and Conduct), and 79
(Services to Employees) of Title 5; or
! any rule or regulation prescribed under any provision of law referred
to in any of the statements in bullets immediately above.
The use of a category rating system for evaluating applicants for positions in the
competitive service is permitted under the new system.
Limitations Relating to Pay. Nothing in §9701 constitutes authority to:
! modify the pay of any employee who serves in an Executive
Schedule position or a position for which the rate of basic pay is
fixed in statute by reference to the Executive Schedule;
! fix pay for any employee or position at an annual rate greater than
the maximum amount of cash compensation allowable under 5
U.S.C. 5307 in a year; or

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! exempt any employee from the application of 5 U.S.C. 5307.
Provisions Relating to Appellate Procedures. It is the sense of the
Congress that employees of the Department of Homeland Security are entitled to fair
treatment in any appeals that they bring in decisions relating to their employment.
In prescribing regulations for any such appeals procedures, the Secretary of
Homeland Security and the Director of the Office of Personnel Management (OPM)
should ensure that employees of the department are afforded the protections of due
process and, toward that end, should be required to consult with the Merit Systems
Protection Board before issuing any such regulations.
Any regulations which relate to any matters within the purview of chapter 77
(on appeals) must be issued only after consultation with the Merit Systems Protection
Board and must ensure the availability of procedures which must be consistent with
requirements of due process and provide, to the maximum extent practicable, for the
expeditious handling of any matters involving the Department of Homeland Security.
Any regulations must modify procedures under chapter 77 only insofar as such
modifications are designed to further the fair, efficient, and expeditious resolution of
matters involving the employees of the Department of Homeland Security.
Sunset Provision. Effective five years after the conclusion of the transition
period defined under Section 1501 of the Act, all authority to issue regulations under
the section (including regulations which would modify, supersede, or terminate any
regulations previously issued under the section) must cease to be available.
Effect on Personnel. Except as otherwise provided in the Homeland
Security Act of 2002, the transfer, under this Act, of full-time personnel (except
special government employees) and part-time personnel holding permanent positions
must not cause any such employee to be separated or reduced in grade or
compensation for one year after the date of transfer to the Department of Homeland
Security. Any person who, on the day preceding their date of transfer to the new
department, held a position compensated on the Executive Schedule, and who,
without a break in service, is appointed in the Department of Homeland Security to
a position having duties comparable to the duties performed immediately preceding
such appointment must continue to be compensated in the new position at not less
than the rate provided for the previous position, for the duration of the person’s
service in the new position. Any exercise of authority under the new Chapter 97,
including under any system established under the chapter, must be in conformance
with the requirements of this subsection.
Sense of the Congress. In authorizing the establishment of an HRM system
for the new department, Congress stated that —
[I]t is extremely important that employees of the Department be allowed to
participate in a meaningful way in the creation of any human resources
management system affecting them;

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[S]uch employees have the most direct knowledge of the demands of their jobs
and have a direct interest in ensuring that their human resources management
system is conducive to achieving optimal operational efficiencies;
[T]he 21st century human resources management system envisioned for the
Department should be one that benefits from the input of its employees; and
[T]his collaborative effort will help secure our homeland.
Federal Workforce Improvement5
Title XIII of P.L. 107-296 authorizes the establishment of Chief Human Capital
Officer (CHCO) positions in federal executive branch agencies and reforms relating
to federal human capital management. Discussion of these provisions follows.
Agency Chief Human Capital Officers. Title XIII, Subtitle A Section
1301 of P.L. 107-296 provides that the title may be cited as the Chief Human Capital
Officers Act of 2002. Section 1302 of the law amends Part II of Title 5 United States
Code by adding a new Chapter 14 — Agency Chief Human Capital Officers. The
new §1401 provides that the agency head must appoint or designate a CHCO who
must advise and assist the agency head and other agency officials in carrying out the
agency’s responsibilities for selecting, developing, training, and managing a high-
quality, productive workforce in accordance with merit system principles; implement
the rules and regulations of the President and OPM and the laws governing the civil
service within the agency; and carry out such functions as his or her primary duty.
The agencies covered by the CHCO provision are the Departments of
Agriculture, Commerce, Defense, Education, Energy, Health and Human Services,
Housing and Urban Development, the Interior, Justice, Labor, State, Transportation,
the Treasury, Veterans Affairs, the Environmental Protection Agency, and the
National Aeronautics and Space Administration. Other agencies covered are the
Agency for International Development, the Federal Emergency Management Agency,
the General Services Administration, the National Science Foundation, the Nuclear
Regulatory Commission, the Office of Personnel Management, the Small Business
Administration, and the Social Security Administration.
5 The provisions under federal workforce improvement originated in the Senate version of
the homeland security department legislation and were not in H.R. 5005 as reported on July
24, 2002 and as passed on July 26, 2002 by the House of Representatives. During the
business meeting on the Lieberman amendment in the nature of a substitute to S. 2452 on
July 24, 2002, the Senate Committee on Governmental Affairs agreed by voice vote to an
amendment offered by Sen. George Voinovich, which added the federal workforce
improvement provisions to the legislation. The Lieberman amendment (S.Amdt. 4467) in
the nature of a substitute to H.R. 5005 was offered in the Senate on Aug. 1, 2002. Several
of the amendment’s provisions had been introduced by Sen. Voinovich in S. 2651 (107th
Congress). See CRS Report RL31516, Civil Service Reform Proposals: A Side-by-Side
Comparison of S. 129 (108th Congress) With Current Law, by Barbara L. Schwemle and L.
Elaine Halchin; and CRS Report RL 31518, Federal Workforce Flexibility Act of 2003: S.
129 (108th Congress), by Barbara L. Schwemle and L. Elaine Halchin.

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Under the new §1402, CHCOs have six functions, including (1) setting the
workforce development strategy of the agency; (2) assessing workforce
characteristics and future needs based on the agency’s mission and strategic plan; (3)
aligning the agency’s human resources policies and programs with organization
mission, strategic goals, and performance outcomes; (4) developing and advocating
a culture of continuous learning to attract and retain employees with superior
abilities; (5) identifying best practices and benchmarking studies; and (6) applying
methods for measuring intellectual capital and identifying links of that capital to
organizational performance and growth. CHCOs must have access to all records,
reports, audits, reviews, documents, papers, recommendations, or other materials that
are the property of the agency or are available to the agency; and relate to programs
and operations with respect to which the CHCO has responsibilities. The CHCO
may request such information or assistance as may be necessary for carrying out the
duties and responsibilities provided by Chapter 14 from any federal, state, or local
governmental entity.
Section 1303 of the law establishes a CHCO Council consisting of the OPM
director who acts as chairperson; the OMB deputy director of management who acts
as vice chairperson; and CHCOs of executive departments and any other members
designated by the OPM director. The council must meet periodically to advise and
coordinate the activities of the member agencies on such matters as modernization
of human resources systems, improved quality of human resources information, and
legislation affecting human resources operations and organizations. The CHCO
Council must ensure that representatives of federal employee labor organizations are
present at a minimum of one meeting of the council each year. The representatives
are not members of the council. Each year the CHCO Council must submit a report
to Congress on its activities.
Section 1304 of the law amends 5 U.S.C. 1103 by adding a subsection (c) which
provides that OPM must design a set of systems, including appropriate metrics, for
assessing the management of human capital by federal agencies. The systems must
be defined in OPM regulations and include standards for (A) aligning agency human
capital strategies with their missions, goals, and organizational objectives and
integrating those strategies into agency budget and strategic plans; (B) closing skill
gaps in mission critical occupations; (C) ensuring continuity of effective leadership
through implementation of recruitment, development, and succession plans; (D)
sustaining a culture that cultivates and develops a high performing workforce; (E)
developing and implementing a knowledge management strategy supported by
appropriate investment in training and technology; and (F) holding managers and
human resources officers accountable for efficient and effective human resources
management in support of agency missions in accordance with merit system
principles.
The CHCO provisions become effective 180 days after the Act’s enactment
(May 24, 2003) under Section 1305 of the law.

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Reforms Relating to Federal Human Capital Management
Subtitle B of Title XIII of P.L. 107-296 provides for reforms relating to federal
human capital management as the following discusses.6
Inclusion of Agency Human Capital Strategic Planning in
Performance Plans and Program Performance Reports. Section 1311 of
the law amends 31 U.S.C. 1115(a)(3) to read: “provide a description of how the
performance goals and objectives are to be achieved, including the operation
processes, training, skills and technology, and the human, capital, information, and
other resources and strategies required to meet those performance goals and
objectives.” With respect to each agency with a Chief Human Capital Officer
(CHCO), the CHCO must prepare that portion of the annual performance plan
described under 31 U.S.C. 1115(a)(3).7 The section also amends 31 U.S.C. 1116(d)
by adding a new paragraph (5) (old (5) redesignated) to require agencies to include
a review of the performance goals and evaluation of the performance plan relative to
the agency’s strategic human capital management in program performance reports.
Reform of the Competitive Service Hiring Process. Section 1312 of
the law amends 5 U.S.C. 3304(a) by adding a new paragraph (3) providing authority
for agencies to appoint, without regard to 5 U.S.C. 3309 through 3318, candidates
directly to positions for which public notice has been given and OPM has determined
that there exists a severe shortage of candidates or there is a critical hiring need.
OPM regulations must prescribe criteria for identifying such positions and may
delegate authority to make determinations under such criteria.
Section 1312 also adds a new Section 3319 — Alternative Ranking and
Selection Procedures to Title 5 United States Code. OPM, or an agency which has
been delegated examining authority, may establish category rating systems for
evaluating applicants for positions in the competitive service. Applicants may be
evaluated under two or more quality categories based on merit, consistent with OPM
regulations, rather than be assigned individual numerical ratings.8 Within each
quality category, applicants who are eligible for veterans’ preference must be listed
ahead of applicants who are not eligible for preference. Except for applicants for
scientific and professional positions at GS-9 (equivalent or higher), each applicant
6 The Lieberman amendments in the nature of a substitute to H.R. 5005 (S.Amdt. 4467,
S.Amdt. 4471) also included an additional provision under reforms relating to federal human
capital management. Section 2403 of the Lieberman amendment would have amended 5
U.S.C. Subchapter V, Chapter 55 by adding a new §5550b providing that an employee
would have received one hour of compensatory time off for each hour spent by the employee
in travel status away from his or her official duty station, to the extent that the time spent
in travel status was not otherwise compensable. OPM would have prescribed regulations
to implement the provision.
7 The law redesignates 31 U.S.C. 1115(f) and insert this provision as a new subsection (f).
8 §3319(a).

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who is a disabled veteran with a compensable service-connected disability of 10%
or more must be listed in the highest quality category.9
An appointing official may select any applicant in the highest quality category,
or, if fewer than three candidates have been assigned to the highest quality category,
in a merged category consisting of the highest and the second highest quality
categories. The appointing official may not pass over a preference eligible in the
same category from which selection is made, unless the requirements of 5 U.S.C.
3317(b) or 3318(b), as applicable, are satisfied.10
Each agency that establishes a category rating system must submit in each of the
three years following that establishment, a report to Congress on the system that must
include information on the number of employees hired under the system; the system’s
impact on the hiring of veterans and minorities, including those who are American
Indian or Alaska Natives, Asian, Black or African American, and native Hawaiian
or other Pacific Islanders; and the way in which managers were trained in the
administration of the system.11
OPM could prescribe regulations to carry out the provisions.12
Student Volunteer Transit Subsidy. Section 1314 of the law amends 5
U.S.C. 7905(a)(1) to provide that a student who provides voluntary services is
eligible for a transit subsidy.
Subtitle D of Title XIII of P.L. 107-296 amends current law provisions on
academic training.
Academic Training. Section 1331 of the law amends 5 U.S.C. 4107. The
section, renamed “Academic degree training,” provides that an agency may select and
assign an employee to academic degree training and may pay or reimburse the costs
of the training from appropriated or other available funds. The training must
contribute significantly to meeting an identified agency training need, to resolving
an identified agency staffing problem, or to accomplishing goals in the agency’s
strategic plan; be part of a planned, systematic, and coordinated agency employee
development program linked to accomplishing the agency’s strategic goals; and be
accredited and provided by a college or university that is accredited by a nationally
recognized body.13
In exercising the authority, an agency must, consistent with the merit system
principles at 5 U.S.C. 2301(b)(2) and (7), consider the need to maintain a balanced
workforce in which women, members of racial and ethnic minority groups, and
9 §3319(b).
10 §3319(c)(1)(2).
11 §3319(d).
12 §3319(e).
13 §4107(a).

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persons with disabilities are appropriately represented in government service and
provide employees effective education and training to improve organizational and
individual performance. The agency also must assure that the training is not for the
sole purpose of providing an employee with an opportunity to obtain an academic
degree or to qualify for appointment to a particular position for which the degree is
a basic requirement; and assure that no authority is exercised on behalf of any
employee occupying or seeking to qualify for a noncareer appointment in the Senior
Executive Service; or appointment to any position that is excepted from the
competitive service because of its confidential policy-determining, policy-making,
or policy-advocating character. The agency must, to the greatest extent practicable,
facilitate the use of online degree training.14
Subtitle H, Section 881 of P.L. 107-296 mandates that the Secretary of
Homeland Security, in consultation with the OPM Director, review the pay and
benefit plans of each agency whose functions are transferred to the new department.
Within 90 days after the Act’s enactment (Sunday, February 23, 2003), the secretary
must submit a plan to the President of the Senate and the Speaker of the House of
Representatives and the appropriate committees and subcommittees of Congress for
ensuring, to the maximum extent practicable, the elimination of disparities in pay and
benefits throughout the department, especially among law enforcement personnel,
that are inconsistent with the merit system principles set forth at 5 U.S.C. §2301.
The report, which consists of two tables transmitted with a cover letter, was
submitted to Congress on March 5, 2003. According to Secretary of Homeland
Security Tom Ridge, DHS plans
to address the issue of pay disparities within the new human resources system
design. This report accordingly focuses on identifying differences in pay and
benefits among employees transferring to DHS without reaching specific
conclusions about whether those differences constitute unwarranted disparities
or making specific recommendations regarding how those differences might be
eliminated. Those findings and recommendations will be included in our HRM
systems proposal which will be submitted to you later this year.15
Implementation of the Law
Some 22 agencies employing about 170,000 to 180,000 employees will be
transferred to the new homeland security department.16 The Bush Administration
14 §4107(b).
15 Letter from Tom Ridge to Rep. J. Dennis Hastert, Speaker of the House of
Representatives, Mar. 5, 2003. The letter transmits two tables to Congress entitled
“Employees Transferring to the Department of Homeland Security Who Have Law
Enforcement Duties” and “Summary of Differences By Type of Pay or Benefit.”
16 In a Jan. 7, 2003 memorandum , Office of Management and Budget Director Mitchell E.
Daniels, Jr. directed the agencies being transferred to the Department of Homeland Security
to document key financial, logistical, and human resources for transfer. Entities transferring
on Mar. 1, 2003 were directed to submit their information on appropriations and funds and
(continued...)

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published a Reorganization Plan for the department on November 25, 2002.17
Homeland Security Director Tom Ridge, nominated by President Bush to head the
department, conducted a town hall meeting with future employees of the department
on December 17, 2002.18
The Senate Committee on Governmental Affairs conducted a confirmation
hearing for Mr. Ridge on January 17, 2003. During the hearing, Mr. Ridge said that
he would “solicit the advice from men and women who work in the new department
... about how to improve day-to-day operations that they have been involved in for
years, if not decades” and “pledged to create a merit-based personnel system.”19 The
Senate confirmed him as the Secretary of Homeland Security on January 22, 200320
and he was sworn into office by President Bush on January 24, 2003.
In December 2002, OPM, in conjunction with the Department of Homeland
Security, established several working groups to begin developing a personnel system
for the department. The working groups will focus on the issues of performance
appraisals, job classifications, pay, labor management, and discipline and employee
appeals. OPM initially stated that it hoped to have a draft proposal of the new system
ready by June 1, 2003,21 but Government Executive reported on March 18, 2003 that
an OPM official stated that this deadline would not be met.22 According to the
report:
16 (...continued)
personnel and positions by Feb. 14, 2003. An attachment to the memorandum provided the
format for listing personnel and positions. See U.S., Executive Office of the President,
Office of Management and Budget, Memorandum for the Heads of Selected Departments
and Agencies, Determination Orders Organizing the Department of Homeland Security, M-
03-04, Jan. 7, 2003. The memorandum is available on the Internet at [http://www.
whitehouse.gov/omb/memoranda/print/m03-04.html], visited Feb. 26, 2003.
17 White House Office, “Department of Homeland Security Reorganization Plan,” Nov. 25,
2002, Washington, DC. The reorganization plan is available on the Internet at
[http://www.whitehouse.gov/news/releases/2002/11/reorganization_plan.pdf], visited Jan.
3, 2003. Also see CRS Report RL31493.
18 White House Office, “Remarks by Governor Tom Ridge, Homeland Security-Designate
in a Town Hall Meeting for Future Employees of the Department of Homeland Security,”
Dec. 17, 2002, Washington, DC. The remarks are available on the Internet at
[http://www.whitehouse.gov/news/releases/2002/12/print/20021217-14.html], visited Jan.
3, 2003.
19 Jason Peckenpaugh, “Ridge Vows to Set Performance Targets for Homeland Security,”
Jan. 17, 2003. Available on the Internet at [http://www.govexec.com], visited Feb. 26, 2003.
20 By a unanimous vote of 94 yeas (Vote No. EX. 13).
21 Tim Kauffman, “OPM Promises Homeland Security Personnel System by June,” Federal
Times, Dec. 2, 2002. Available on the Internet at [http://federaltimes.com/], visited Feb. 26,
2003.
22 Tanya N. Ballard, “Report Lacks Details on Merging Homeland Personnel Systems,” Mar.
18, 2003. Available on the Internet at [http://www.govexec.com], visited Mar. 26, 2003.

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Until recently, the department didn’t have officials in place to make key
decisions to get the design process rolling, Jeffrey Sumberg, OPM’s principal
policy adviser on labor relations said ... [He] said that [OPM director] James and
Homeland Security officials would meet with federal union leaders to agree on
a process for setting up the new system. Once they agree on the process, actual
planning will begin.23
Government Executive reported that department officials and union leaders
agreed on the numbers of personnel to be involved with and the basic timeline for the
design of the new personnel system.24
On April 1, 2003, Secretary of Homeland Security Tom Ridge and OPM
Director Kay Coles James announced that they were launching the process for
designing a new human resources management system for the Department of
Homeland Security. According to the press release on the announcement, “The goal
is to create a 21st century personnel system that is flexible and contemporary while
preserving basic civil service principles and the merit system.”25 Creating the system
will involve this process:
A Senior Review Committee will develop personnel system options to be
considered by the Secretary and the Director and their senior staff. The
committee will include, among others, the Under Secretary for Management,
Department program leaders, officials from OPM, and major union leaders. A
small number of academics and policy experts will serve as ex officio members
who will advise the committee on specific issues.
A Design Team will be tasked with conducting research and outreach to provide
a full range of options for the Senior Review Committee to consider. The team
will include DHS program managers from all directorates and disciplines, union
and employee representatives and human resource specialists from DHS and
OPM. Expert consultants from the private sector will also support the team.26
The initial meetings of the design team began on April 1, 2003 and will continue
through early September 2003, when the team “will deliver a full range of options to
the Senior Review Committee.”27 Field meetings will be conducted by the design
team in New York City, Miami, Detroit, El Paso, Atlanta, Seattle, and Salt Lake City;
locales with the largest concentrations of DHS employees. Employees in rural areas
will be brought to the meetings in the major cities or smaller sessions will be
23 Ibid.
24 Brian Friel, “New Department Begins Pay and Personnel Overhaul,” April 1, 2003.
Available on the Internet at [www.govexec.com], visited April 7, 2003.
25 U.S. Department of Homeland Security, Department of Homeland Security Personnel
System Fact Sheet, April 1, 2003. Available on the Internet at [http://www.dhs.gov], visited
May 14, 2003. Hereafter referred to as DHS Fact Sheet.
26 Ibid. According to the Washington Post, the design team is comprised of some 60
members. Stephen Barr, “Work Begins on Rules for New Department — and Perhaps All
of Government,” The Washington Post, April 2, 2003, p. B2.
27 DHS Fact Sheet.

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CRS-11
conducted in their home areas. After receiving the options, “the Senior Review
Committee will present a refined range of options to the Secretary and the Director”
who will then issues proposed rules. Employee representatives and Congress will be
notified and any differences will be reconciled. The Secretary and Director will issue
regulations for the new system whose implementation is targeted to begin by “the end
of this calendar year [2003].”28
In announcing the launching of the design process for the new personnel system,
Under Secretary for Management Janet Hale said that “We want this process to be
very inclusive, and we will seek out and listen to DHS employees and managers, and
experts both inside and outside of Government.”29
A Web site, available to the public, has been established for the department.30
To keep employees informed about the creation of the department, an internal Web
site also has been established. Another Web site will enable employees to e-mail
their suggestions for the new personnel system to the design team.
The public Web site provides the following information about human resources
management at the department:
What We Know Right Now:
Employees will retain their current benefits.
Employees will maintain their current civil service status, pay, and position
classifications for at least a year.
Employees who are members of collective bargaining units will see no change when
they transfer to DHS since those units will transfer at the same time.
Employees will be protected from improper political influence, reprisals against
whistleblowers, and prohibited personnel practices.
Veterans will receive the hiring preferences they are entitled to under law.31
According to the agency, it has “entered into Memoranda of Agreements
(MOAs) with other federal Departments to ensure that all management,
administrative and other support functions for the incoming organizational elements
continue after March 1 and until DHS establishes the necessary infrastructure to
perform these functions.”32
28 Ibid.
29 U.S. Department of Homeland Security, Personnel System Design Launch Memo from
Under Secretary Janet Hale, April 1, 2003. Available on the Internet at
[http://www.dhs.gov], visited April 7, 2003.
30 See [http://www.dhs.gov/dhspublic/index.jsp], visited May 14, 2003.
31 U.S. Department of Homeland Security, Working With DHS. Available on the Internet
at [http://www.dhs.gov/dhspublic/display?theme=81&content=278], visited May 14, 2003.
32 U.S. Department of Homeland Security, Department of Homeland Security Facts for
March 1, 2003. Available on the Internet at [http://www.dhs.gov/dhspublic/display?theme
=43&content=489], visited Mar. 26, 2003.

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CRS-12
A January 2003 report by the Brookings Institution noted the “vast array of
largely incompatible management systems, including at least 80 different personnel
systems mixed in and among the agencies” being transferred to the new department.33
On May 5, 2003, President Bush announced his intention to appoint Ronald
James as the Chief Human Capital Officer (CHCO) for the Department of Homeland
Security.34 P.L. 107-296 created the CHCO position as a presidential appointment
not requiring confirmation. The CHCO reports to the Secretary of Homeland
Security, or to another department official as the secretary may direct. He ensures
that all employees of the department are informed of their rights and remedies under
5 U.S.C. Chapters 12 (Merit Systems Protection Board, Office of Special Counsel,
and Employee Right of Action) and 23 (Merit System Principles) by participating in
the certification program of the Office of Special Counsel, achieving certification
from the OSC of the department’s compliance with 5 U.S.C. 2302(c); and informing
Congress of such certification not later than 24 months after the enactment of the
Homeland Security Act of 2002 (November 25, 2004).35
During an April 29, 2003 House Subcommittee on Civil Service and Agency
Organization hearing and a May 6, 2003 House Committee on Government Reform
hearing, both on proposed personnel flexibilities for the Department of Defense,
several Members of Congress stated that they have, thus far, learned few details
about the establishment of the new human resources management system at the
Department of Homeland Security.
Human Resources Management at
Selected Agencies Being Transferred
Human resources management (HRM) offices are currently providing a full
range of services at six of the eight large agencies being transferred to the homeland
security department. The Transportation Administration Service Center (TASC) of
the Department of Transportation provides human resource services to the
Transportation Security Administration (TSA) on a fee-for-service basis. Federal
Protective Services has a personnel representative in the central office in
Washington, DC, and in each of its 11 regional offices. Human Resources
Management offices and the number of their employees include:
! Animal and Plant Health Inspection Service (APHIS) — 180
employees located in Washington, DC; Riverdale, MD; and
Minneapolis, MN;
33 Daalder, Ivo H., et. al., Protecting the American Homeland: One Year On (Washington:
The Brookings Institution, Jan. 2003), pp. 14-15. Available on the Internet at
[http://www.brook.edu/views/papers/daalder/20030101.htm], visited Feb. 26, 2003.
34 See: CRS Report RL31492, Homeland Security: Components and Management Positions
in the New Department, by Henry B. Hogue, p. 10.
35 P.L. 107-296, Nov. 25, 2002, 6 U.S.C. 344, 116 Stat. 2219.

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CRS-13
! Federal Emergency Management Agency (FEMA) — 93 employees;
! TSA — 15 employees, but anticipate having 45 to 50 employees;
! Coast Guard — 400 employees at headquarters and 2,600 to 2,700
employees working in the field at seven training centers, a pay
center, and the personnel and recruiting commands;
! Customs Service — 268 full-time permanent employees;
! INS — approximately 552 full-time permanent and temporary
employees in Washington, DC; and approximately 200 employees
located in Burlington, VT; Dallas, TX; and Laguna Niguel, CA; and
! Secret Service — 407 employees (the office is allocated 471
positions).
All the HRM offices, except TSA, reported that they provide various personnel
services that would generally include staffing, position classification, payroll
preparation, employee relations, labor relations, processing of personnel actions,
benefits (retirement, health insurance, life insurance) counseling, and development
of policies on various personnel issues.36
Issues for Consideration
Authorizing a new human resources management system for the new department
raises several issues, including questions about equity among the various departments
and agencies in the executive branch. Discussions about a new system may include
staffing requirements, hiring, and pay among the issues considered.37
With regard to staffing requirements, the Administration has stated that an
increased number of employees is not anticipated. According to Press Secretary Ari
Fleischer, the proposal is: “not a massive addition to the bureaucracy .... [I]f you take
100 workers from Department X and put those 100 workers in Department Y, you
still have 100 workers. They’ve been reorganized. But it is not an addition to the
government, because you’re working with the same, essentially, group of people.”38
Others, however, hold a different view. For example, the National Treasury
Employees Union has asserted that the Customs Service “by its own account needed
36 Information provided to CRS by human resources management offices by telephone, June
12-13 and 17-19, 2002.
37 For discussion of Title 5 United States Code provisions on government management, see
CRS Report RL30795, General Management Laws: A Selective Compendium — 107th
Congress, Ronald C. Moe, project coordinator. See especially Chapter IV.
38 “Press Secretary’s Morning Conversation with Reporters,” June 6, 2002. Available on
the Internet at [http://www.whitehouse.gov/news/releases/2002/06/print/20020606-1.html],
visited June 26, 2002.

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CRS-14
an additional 14,000 employees to successfully accomplish its mission before
September 11” and “is now stretched beyond the limit.”39 In his statement at the
Senate Committee on Governmental Affairs hearing, Senator George Voinovich
noted, “The Partnership for Public Service says that one-third of all of the employees
from five of the major agencies being folded into the new department are going to
have their people eligible for retirement ... in five years.”40
During a speech before the National Association of Counties on March 3, 2003,
Secretary of Homeland Security Tom Ridge said that the agency plans to hire more
than 1,700 new inspectors at land, sea, and air ports of entry in FY2003 — more than
600 at airports, nearly 700 along the northern border, 100 in the southwest, and
nearly 300 at maritime ports of entry — and nearly 600 additional border patrol
agents.41 On April 30, 2003, the Transportation Security Administration announced
that 6,000 passenger and baggage screeners would be cut by September 30, 2003,
according to the Federal Times. As of March 31, 2003, TSA employed 55,600
screeners, but the agency’s FY2004 budget proposes a screener workforce numbering
48,100 employees.42
The Secret Service, Coast Guard, Customs Service, Immigration and
Naturalization Service, Animal and Plant Health Inspection Service, Transportation
Security Administration, Federal Protective Services, and Federal Emergency
Management Agency are being transferred to the new department. Governor Ridge,
in his testimony before the Senate Committee on Governmental Affairs and the
House Committee on Government Reform on June 20, 2002, stated: “In order to
respond to rapidly changing conditions, the Secretary [of homeland security] would
need to have great latitude in re-deploying resources, both human and financial. The
Secretary should have broad reorganizational authority in order to enhance
operational effectiveness, as needed.”43 A consolidated human resources
management office to serve some of the agencies transferred to a new department
would, perhaps, be an example of such a redeployment. If so, there would be the
potential that not all current HRM employees would be needed to perform personnel
services. Details about possible retraining or reassignments of personnel have not
been provided.
39 National Treasury Employees Union, “Proposed Homeland Security Cabinet-Level
Agency No Substitute for Adequate Funding, Union Leader Questions Timing of President’s
Announcement,” June 6, 2002. Available on the Internet at [http://www.nteu.org], choose
“Press Releases,” visited June 26, 2002.
40 The Federal Document Clearing House transcript of the Senate Committee on
Governmental Affairs hearing, June 20, 2002.
41 Remarks by Secretary Ridge to the National Association of Counties, March 3, 2003.
Available on the Internet at [http://www.dhs.gov/dhspublic/display?theme=44&content=
490], visited March 26, 2003.
42 Tim Kauffman, TSA to Cut 6,000 Screeners in Budget Move, Federal Times. Available
on the Internet at [http://www.federaltimes.com], visited May 14, 2003.
43 Written statement of Governor Tom Ridge, June 20, 2002. Available on the Internet at
[http://www.senate.gov/~gov_affairs/hearings.htm], visited June 26, 2002.

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CRS-15
As for a hiring system for the new department, the use of the term “personnel
flexibilities” as it relates to hiring sometimes means direct hiring authority44 or
exceptions (such as category ranking) to the Rule of Three,45 for selection of
candidates. These could help speed the selection and hiring of new staff. Concerns
about these flexibilities may center on preserving two civil service standards —
merit-based hiring free of political influence or favoritism, and preference in hiring
for veterans. The American Federation of Government Employees (AFGE), in
commenting on the proposal, stated, “This bill has the potential to allow the new
Department to engage in personnel actions that are today illegal, such as picking out
individual employees for transfer or removal from their jobs”; and “[i]n opening the
door to hiring and firing on the basis of politics and favoritism, ... would impose a
modern day spoils system.”46 TSA is in the excepted service and, therefore, not
covered by the Title 5 United States Code provisions, except for those on veterans
preference.47 TSA is using a contractor to recruit and hire its airport screener
employees. This raises the question of whether, and how, such contractors might be
used in the future, as well as the relative costs and benefits of doing so.
As it relates to pay, the term “personnel flexibilities” sometimes means the
establishment of pay bands as the compensation system. Under such a system,
General Schedule pay grades are consolidated into broader pay bands.48 Currently,
the General Schedule, which provides for 15 pay grades and 10 steps within each
grade, is the compensation system for employees in most of the agencies proposed
for transfer. The TSA, however, is using the pay banding system to compensate
transportation security screeners, criminal investigators, and civil aviation security
specialists (which include federal air marshals). The existence of two distinct pay
systems in one department could raise questions of pay parity between employees
who are performing similar jobs. There are anecdotal reports from the Customs
Service and the Secret Service, among others, that the TSA is hiring away their law
enforcement officers by offering higher salaries. Further, The Washington Post
reported that “[a]s of early June, the TSA had hired 39 general attorneys at an
average salary of $111,000, compared with an average of about $80,000 at the
Department of Transportation, of which the TSA is part.”49 Differences in other
types of compensation systems could also raise questions of parity in a new
department. The U.S. Customs Service’s inspectors and the INS’s border patrol
officers would be incorporated into the new department, but Customs employees, for
44 Direct hiring authority would allow agencies to appoint candidates directly to positions.
45 This term refers to providing the appointing authority with a certificate that includes the
names of three eligibles and requiring appointment from those three names.
46 “AFGE Responds to President’s Homeland Security Bill,” June 18, 2002. Available on
the Internet at [http://www.afge.org], choose “News Releases,” visited June 26, 2002.
47 P.L. 107-71, Nov. 19, 2001, 115 Stat. 601.
48 Pay bands provide greater discretion to federal managers in setting salary levels for
employees.
49 Dan Morgan and Greg Schneider, “Lawmakers Fear Costly Price Tag to Create Homeland
Dept.,” Washington Post, June 20, 2002, p. A 21.

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CRS-16
example, have their own unique and more remunerative system of overtime and
premium pay.50
On July 31, 2002, the Partnership for Public Service issued a preliminary report
which recommended that the Department of Homeland Security adopt pay banding
and critical pay authorities, category ranking systems for hiring, and voluntary
separation incentive payments.51
Other issues likely to be considered during discussions about the HRM system
would include to whom the head/heads of the HRM function would report in the new
department52 and what kind of automated human resources and payroll systems the
various agencies currently have and how they might be merged if a consolidation of
HRM services were to occur. Among other considerations are that APHIS and INS
currently have staff in field offices performing personnel services; what role would
they have in the new department? Also, APHIS provides personnel support to the
Agricultural Marketing Service and the Grain Inspection, Packers and Stockyards
Administration of the Department of Agriculture and the Merit Systems Protection
Board; would these responsibilities continue in the new department?
Conclusion
Title VIII, Subtitle E, Section 841 of P.L. 107-296 provides that the Secretary
of Homeland Security may, in regulations prescribed jointly with the OPM Director,
establish, and from time to time adjust, an HRM system for some or all of the
organizational units of the Department of Homeland Security. Key issues to be
considered in establishing an HRM system for the new department might include
staffing requirements and hiring and pay (for instance, whether General Schedule or
pay banding) systems. Other issues likely to be considered would include the kind
of automated human resources and payroll systems the various agencies transferred
to the new department currently have and how those systems might be merged if a
consolidation of HRM services were to occur.
50 19 U.S.C. 267.
51 Partnership for Public Service, Homeland Security: Winning the War for Talent to Win
the War on Terror (Washington: The Partnership), July 31, 2002, pp. 24-25.
52 Since enactment of the Government Performance and Results Act, P.L. 103-62, on Aug.
3, 1993, Congress and the Administration have been encouraging agencies to elevate the
role of human resources management in strategic planning.

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