OMB Lifts Hiring Freeze and Issues Plan to Reduce and Reform the Federal Civilian Workforce

April 19, 2017 IN10690

On April 12, 2017, Office of Management and Budget (OMB) Director Mick Mulvaney issued a memorandum titled, "Comprehensive Plan for Reforming the Federal Government and Reducing the Federal Civilian Workforce." The memorandum lifts the hiring freeze instituted by President Donald Trump on January 23, 2017.

In addition, the memorandum sets forth steps that executive branch departments and agencies must take to fulfill other requirements of the hiring freeze memorandum and the March 13, 2017, Executive Order 13781 on reorganizing the executive branch. These directives, respectively, required OMB to establish plans to (1) reduce the federal workforce through attrition; and (2) reorganize the executive branch to improve agency efficiency, effectiveness, and accountability. To this end, OMB requires

  • the development of an Agency Reform Plan according to specified plan contents;
  • agency actions to achieve near- and long-term federal workforce reductions; and
  • agency actions to improve employee performance.

This Insight focuses primarily on OMB's workforce reduction and employee performance requirements. Congress may have a limited role in directly overseeing implementation of OMB's requirements, but may have opportunities to conduct oversight and affect the overall impact of these requirements. For example, the amount and allocation of workforce-related funding provided to agencies might impact how and to what extent agencies undertake reductions.

Agency Reform Plans

All executive agencies, boards, and commissions must submit reform plans according to a "detailed timeline" posted on Max.gov—a website available only to the executive branch. OMB said it will grant limited exceptions on a case-by-case basis. In the Agency Reform Plan, the head of an agency will identify proposals to improve the efficiency, effectiveness, and accountability of the agency. According to the OMB memo, an agency's plan will analyze

  • activities that should be eliminated;
  • activities that should be restructured and merged;
  • improvements to organizational efficiency and effectiveness; and
  • workforce reductions and employee performance improvements.

Factors to be considered in conducting the analysis are whether a function is duplicative, essential, an appropriate federal role, justified by cost-benefit ratio, efficient and effective, and serving the customer. An agency will be required to justify its plan to OMB, including providing the evidence on which the analysis is based.

Workforce Reductions and Employee Performance Requirements

As part of the Agency Reform Plan, OMB directs agencies to complete three primary actions related to workforce reductions and improving employee performance, as follows.

Achieve Near-Term Workforce Reductions Consistent with the President's FY2018 Budget Proposals

Agencies are directed to identify workforce reductions for FY2018 through FY2022 consistent with the discretionary out-year levels included in the President's FY2018 budget submission, to be released in spring 2017, and forthcoming guidance on the President's FY2019 budget submission. The Office of Personnel Management (OPM) will provide templates to agencies on requesting Voluntary Early Retirement Authority and Voluntary Separation Incentive Payments and will expedite the review of most requests within 30 days. OMB further said that agencies are authorized to

  • eliminate positions immediately which are vacant and not needed;
  • determine whether employees who are on administrative leave for performance or misconduct reasons should be returned to work or subjected to other appropriate action, including removal; and
  • ensure that an employee whose performance is deficient and has been reassigned to other duties is contributing to the agency's ability to carry out its mission.

Develop a Long-Term Workforce Reduction Plan

OMB's memorandum also directs agencies to develop long-term workforce reduction plans as part of their Agency Reform Plans. Specifically, agencies are directed to identify their long-term staffing plans by

  • using data, including career field benchmarking and time studies, to determine appropriate full-time equivalent (FTE) baselines;
  • examining total personnel cost (including salary and benefits, overtime, training, awards, career ladder progression, employee services, and office expenses) and consider restructuring duties among lower graded and higher graded employees;
  • reviewing and revising (as needed) organizational structures, including spans of control and delegations of authority;
  • eliminating the recrafting or restating of policies for component or regional offices when using agency-wide policies would be more efficient;
  • reviewing positions when they become vacant for currency with mission needs, whether at appropriate grade level, and making any changes to positions efficiently; and
  • keeping positions current and assessing how technology may have changed or eliminated the need for positions related to fields that are rapidly transforming or have shared services available (e.g., human resources activities, financial management).

Agencies are supposed to work with OMB to develop workforce reshaping priorities. However, the agency head retains the authority to approve specific workforce reshaping strategies and to approve the final workforce plan.

Develop a Plan to "Maximize" Federal Employee Performance

Finally, OMB's memorandum directs agencies to develop a plan to review and improve their employee performance management systems as a means to "maximize" employee performance. The plan must include a timeline and actions to:

  • Review and update policies on managing poor performance and conduct, including the identification and removal of barriers to address such issues.
  • Provide training on employee performance and conduct to Senior Executive Service members, supervisors/managers, and those involved in employee relations.
  • Establish real-time assistance to managers who are addressing performance issues, perhaps through a Manager Support Board.
  • Hold managers accountable for employee performance and conduct, particularly by including such responsibilities in managers' and supervisors' performance plans.
  • Provide guidance on the process and proper use of performance improvement plans (PIPs). Agencies must also track the use and impact of PIPs on employee performance.
  • Limit use of unnecessary administrative leave in accordance with the Administrative Leave Act of 2016 (P.L. 114-238, §1138).

Figure 1, below, depicts a timeline for completing the aforementioned workforce actions.

Figure 1. Timeline for Implementing Federal Workforce Management Requirements

Source: CRS analysis of U.S. Office of Management and Budget, memorandum from OMB Director Mick Mulvaney, to the heads of executive departments and agencies, "Comprehensive Plan for Reforming the Federal Government and Reducing the Federal Civilian Workforce," M-17-22, April 12, 2017, at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2017/M-17-22.pdf.

The memorandum appears to be an initial step of a broader long-term plan to reform the federal government. OMB said it will release a final Government-wide Reform Plan in February 2018 as part of the President's FY2019 budget submission and will begin tracking reforms using existing mechanisms established under the GPRA Modernization Act of 2010.