[Senate Hearing 113-708] [From the U.S. Government Publishing Office] S. Hrg. 113-708 NOMINATION OF EARL L. GAY ======================================================================= HEARING BEFORE THE COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED THIRTEENTH CONGRESS SECOND SESSION __________ NOMINATION OF EARL L. GAY TO BE DEPUTY DIRECTOR, OFFICE OF PERSONNEL MANAGEMENT __________ NOVEMBER 18, 2014 Available via the World Wide Web: http://www.fdsys.gov/ Printed for the use of the Committee on Homeland Security and Governmental Affairs [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] U.S. GOVERNMENT PUBLISHING OFFICE 92-9074 PDF WASHINGTON : 2015 ________________________________________________________________________________________ For sale by the Superintendent of Documents, U.S. Government Publishing Office, http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free). E-mail, [email protected]. COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS THOMAS R. CARPER, Delaware Chairman CARL LEVIN, Michigan TOM COBURN, Oklahoma MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona MARY L. LANDRIEU, Louisiana RON JOHNSON, Wisconsin CLAIRE McCASKILL, Missouri ROB PORTMAN, Ohio JON TESTER, Montana RAND PAUL, Kentucky MARK BEGICH, Alaska MICHAEL B. ENZI, Wyoming TAMMY BALDWIN, Wisconsin KELLY AYOTTE, New Hampshire HEIDI HEITKAMP, North Dakota Gabrielle A. Batkin, Staff Director John P. Kilvington, Deputy Staff Director Deirdre G. Armstrong, Professional Staff Member Ashley E. Poling, Counsel, Subcommittee on the Efficiency and Effectiveness of Federal Programs and the Federal Workforce Keith B. Ashdown, Minority Staff Director Christopher J. Barkley, Minority Deputy Staff Director Andrew C. Dockham, Minority Chief Counsel Sally Anne Braeuer, Minority Counsel Darien B. Flowers, Minority Research Assistant, Subcommittee on the Efficiency and Effectiveness of Federal Programs and the Federal Workforce Laura W. Kilbride, Chief Clerk Lauren M. Corcoran, Hearing Clerk C O N T E N T S ------ Opening statements: Page Senator Tester............................................... 1 Senator Portman.............................................. 4 Senator Ayotte............................................... 8 WITNESSES Tuesday, November 18, 2014 Rear Admiral Earl L. Gay, USN (Ret.), to be Deputy Director, Office of Personnel Management Testimony.................................................... 2 Prepared statement........................................... 17 Biographical and financial information....................... 19 Letter from the Office of Government Ethics.................. 35 Responses to pre-hearing questions........................... 37 Responses to post-hearing questions.......................... 55 Hon. John Lewis, A Representative in Congress from the State of Georgia 11 NOMINATION OF EARL L. GAY TUESDAY, NOVEMBER 18, 2014 U.S. Senate, Committee on Homeland Security and Governmental Affairs, Washington, DC. The Committee met, pursuant to notice, at 2:30 p.m., in room SD-342, Dirksen Senate Office Building, Hon. Jon Tester, presiding. Present: Senators Tester, Portman, and Ayotte. OPENING STATEMENT OF SENATOR TESTER Senator Tester. I call this Committee on Homeland Security to order. Good afternoon. We are going to convene this afternoon's hearing to consider the nomination of Rear Admiral Earl Gay to serve as Deputy Director of the Office of Personnel Management (OPM). Rear Admiral Gay, thank you for seeking this position and thanks for being here today. We appreciate your service to this country. Admiral Gay. Thank you, sir. Senator Tester. It should be noted that Rear Admiral Gay has filed responses to his biographical and financial questionnaire. He has answered prehearing questions submitted by the Committee, and his financial statements have been reviewed by the Office of Government Ethics. Without objection, this information will be made part of the hearing record, with the exception of the financial data, which are on file and available for public inspection in the Committee's offices. Rear Admiral Gay currently serves as Senior Adviser to Director Katherine Archuleta at the Office of Personnel Management. He has been in this position since early this fall. A graduate of the U.S. Naval Academy, Rear Admiral Gay has a distinguished career of service in the United States Navy serving as a naval aviator from 1980 to 2013. With a master's degree in human resources management, Rear Admiral Gay's experience will definitely be an asset as he seeks the No. 2 position in the Federal agency tasked with managing the Federal workforce. As we heard from witnesses at the hearing of our Subcommittee on the Efficiency and Effectiveness of Federal Programs and the Federal Workforce in May, there are a growing number of significant challenges to our efforts to recruit and retain experienced and skilled Federal employees. These folks are too frequently used by politicians as their punching bag when the budget season rolls around. Their integrity is often questioned. The retirement benefits are targeted, and pay and hiring freezes are often instituted. At the same time, these same folks, these politicians, also demand an efficient and effective Federal Government. You would never know it by the way they view and often treat the Federal workforce. Rear Admiral Gay, I would actually like to see us invest a little more time and resources into initiatives that allow agencies to better recruit, cultivate, and retain a quality and experienced Federal workforce. And I am not just talking about Federal employees in Washington. I am also talking about Federal employees on the ground in hard-to-recruit areas, for instance, in the Bakken in Glendive Montana. Whether you are talking about an engineer at the Bureau of Land Management or a doctor at the Department of Veterans Affairs, there is a job that needs to be done, and oftentimes these agencies need greater flexibility to incentivize recruitment and retention packages for the folks that they really need to do the job. Today we will also touch upon work done by OPM in carrying out 90 percent of the background investigations for the Federal Government. Along with Ranking Member Portman, Senators McCaskill, Johnson, and others, we have been putting forth a number of ideas to reform the process. In terms of the security clearance process, I look forward to hearing some of your thoughts on where we are and where we need to go in that vein. When Senator Portman gets here, we will certainly give him time for his opening statement, but since he is not, I will turn the floor over to you, Rear Admiral Gay, for your opening statement. TESTIMONY OF REAR ADMIRAL EARL L. GAY, USN (RET.),\1\ TO BE DEPUTY DIRECTOR, OFFICE OF PERSONNEL MANAGEMENT Admiral Gay. Thank you, Chairman Tester, Ranking Member Portman, and Members of the Committee for the opportunity to appear before you today. It is indeed an honor for me to be considered as the nominee to be Deputy Director of the Office of Personnel Management, and I want to thank President Obama for nominating me to this important position and Director Archuleta for her support. --------------------------------------------------------------------------- \1\ The prepared statement of Rear Admiral Gay appears in the Appendix on page 17. --------------------------------------------------------------------------- I especially want to thank and recognize my wife of 32 years, Ardella, who joins me here today and is a retired, 26- year civilian Federal employee; and our two daughters, Faythe, who is a former naval officer, and Carmen, a pharmacist, collectively known as ``Earl's Girls.'' The fact that I am here today is because of their unwavering love and support. Growing up in Atlanta, Georgia, my parents instilled in me the importance of education and a sense of civic duty. I chose to embrace a life of service to my country by applying to the U.S. Naval Academy. It was there that I learned the essence of leadership--defining your vision, articulating expectations, and overseeing progress through transparency and accountability. These guiding principles have served me well throughout my career and made me the leader I am today. If confirmed, I will continue to follow these principles as I work to ensure that OPM is successful in its efforts to recruit, retain, and honor a world-class workforce for the American people. Throughout my 33 years in the Navy, I have had the honor to serve my country in various roles. I have deployed overseas, commanded a naval strike group, served as the Commandant of the Naval District Washington, and managed congressional affairs. These opportunities have afforded me the privilege of working with countless dedicated, patriotic public servants--both military and civilian alike. I am excited about the opportunity to continue to lead and learn from the most committed and capable individuals our government has to offer. If confirmed, I will use my skills in strategic planning and team building to assist Director Archuleta in leading and management of the agency. Under her leadership, OPM has improved our processing of new retirement claims, and we are now completing over 82 percent of cases in 60 days or less. The agency has also made great progress to strengthen our quality oversight controls within our background investigations program, and we continue to provide high-quality investigations for 95 percent of government. I am excited about the opportunity to play a significant role in advancing Director Archuleta's vision and the agency's strategic plan. Given my military and national security background, Director Archuleta has asked that I focus a significant amount of my time on Federal Investigative Services (FIS), working with the program office leadership and our Administration partners to implement the reforms directed in the President's 120 Day Suitability and Security Review. I have also been asked to take the lead in working with our agency partners on efforts to recruit more veterans into our Federal Government. If confirmed, I look forward to working with Director Archuleta on her initiatives related to strengthening our recruitment efforts of women veterans. We must all ensure that we continue to honor the service of our military men and women, especially those returning from conflicts in Iraq and Afghanistan. Public service is a noble profession, and we must do all we can to recruit, retain, and honor a world-class workforce and strengthen and improve the services offered by OPM, from resume to retirement and beyond. Serving as Commander of U.S. Navy Recruiting Command prior to my own retirement, I was able to share my love of country and dedication to public service with young men and women and encourage them to join our ranks. I witnessed over 97,000 patriotic Americans stand like I did so long ago and dare to take an oath and serve their country. I could not have picked a more fitting end to my Navy career, and I believe serving as the Deputy Director of OPM is a natural progression for me to continue to inspire Americans to join the Federal Government and serve their country. I thank you again for allowing me to appear before you today, and at this time, I would be pleased to answer any questions the Committee may have. Senator Tester. Before we get to the questions--and thank you for your testimony, Rear Admiral Gay--I am going to offer Senator Portman the opportunity for an opening statement. OPENING STATEMENT OF SENATOR PORTMAN Senator Portman. Thank you, Mr. Chairman, and thank you for having this hearing. And, Admiral Gay, congratulations on your nomination. Admiral Gay. Thank you, sir. Senator Portman. I hope my friend John Lewis shows up here in a minute to add his accolades to your service to our country. Thank you for your willingness to step up for this new job. We need you. OPM has got a lot of responsibilities right now. In fact, they are increasing, as the Chairman and I have learned through being on our Subcommittee, and there has not been a Deputy Director, I am told, for 3 years. So it is critical that the President nominated someone, and I am glad he has nominated someone who has the experience and the background to be able to be of immediate value to the leadership team at that agency. At its core, I think that your job is to recruit, train, and retain this 21st Century Federal workforce, and, again, as the Chairman and I have found out, we have some challenges. A lot of people are retiring. We have a lot of needs, particularly on the technology front, cyber front, that we need to fill. Health care is a big responsibility, of the Office of Personnel Management. It is both the Affordable Care Act and implementing that, but also existing responsibilities for Federal employees, and so you are going to be charged with a lot, tackling some big management challenges. On the cybersecurity front, we need better skills to be able to confront the serious threats we have right now to our Federal information technology (IT) systems. I am sure you are well aware of that in your work on the Navy side, but this is a really difficult challenge. Agencies have, we have determined, significant challenges in determining the size and composition of their cybersecurity workforce. We think the way the work is defined needs some work. We need to address that, and we think OPM can play a leading role in that. There is bipartisan legislation I have introduced with Mike Bennet called ``The Cybersecurity Workforce Assessment Act'' that we would love to get your input on. And then more generally we have to give the Federal Government the right tools to recruit the best and the brightest and, again, to retain those people. The Chairman has been working on that. The Federal agencies need the ability to share their qualified candidate lists so that potential hires do not fall through the cracks and I was glad to join the Chairman on his bill, which is called ``The Competitive Service Act,'' to address that very issue. I hope the full Committee will pass that legislation soon, and, again, we would love your input on that legislation. We think it could help your new role. So we look forward to getting into some questions with you, and, again, thank you for your willingness to step up to serve your country in a little different capacity but an equally important one. Admiral Gay. Yes, sir. Senator Tester. Well, thank you, Senator Portman. Our Committee rules require that all witnesses at nomination hearings give their testimony under oath, so I would ask you, Rear Admiral Gay, to please stand and raise your right hand and attest in the affirmative at the end. Do you swear that the testimony you are about to give the Committee will be the truth, the whole truth, and nothing but the truth, so help you, God? Admiral Gay. I do. Senator Tester. Let the record reflect that the witness answered in the affirmative. You may be seated. There are a number of questions that are stock general Committee questions, that are asked to every nominee, standard three questions. The first one is: Are you aware of anything in your background that might present a conflict of interest with the duties of the office to which you have been nominated? Admiral Gay. No, sir. Senator Tester. Do you know of any reason, personal or otherwise, that would in any way prevent you from fully and honorably discharging the responsibilities of the office to which you have been nominated? Admiral Gay. No, sir. Senator Tester. Do you know of any reason, personal or otherwise, that would in any way prevent you from serving the full term of office to which you have been nominated? Admiral Gay. No, sir. Senator Tester. Thank you very much. I am going to turn the questions over to Senator Portman while I get my throat cleared out, so, Senator Portman, if you would take over. Senator Portman. Thank you, Senator Tester. And I am going to start on something that actually Senator Tester and I have spent a lot of time on, both in hearings and also through some specific legislation, and that is these background investigation problems that we have had. The problem that we have identified is that some of the background investigations have not been done properly, that there is a backlog, and if anything, I think we are more concerned than ever because the Federal Investigative Service has just removed this contractor, United States Investigations Services (USIS), from their contract. And this has to be placing enormous demands on the remaining contractors. The other two contractors combined were only doing about 25 percent of the background investigations. So, our concern is heightened even further. If you could answer these questions to the best of your ability, we would appreciate it. One, do you know how big the current backlog is that was created when the USIS contract was ended? Admiral Gay. Not the precise number, no, sir, but I can provide that. Senator Portman. Are you aware that there is a significant backlog? Admiral Gay. Yes, sir, I am. Senator Portman. Do you think it is best to manage this transition, both the timeliness of these reports but also the quality of these reports, by bringing on additional contractors? Or would you stay with the contractors who are there? Admiral Gay. I know for a fact that we have brought on an additional contractor, NT Concepts. Back to the question of quality and timeliness, quality is first and foremost our major priority, our No. 1 priority. Senator Portman. On the investigations, do you know if there has been consideration to seek a memorandum of understanding with other agencies that already have background investigation firms on contract to be able to expedite that process? Admiral Gay. Not specifically, but I know that we are considering other alternatives so that we are not stuck with one major contractor or two. So we plan on looking at market research to make solicitations to diversify our contractor pool. Senator Portman. Just in general, do you have anything to add to this in terms of the Federal Investigative Service and how we are going to go about having more timely and higher quality reviews? Admiral Gay. Well, right now, sir, I would ask for a little patience because, as I stated before, the quality and integrity of the background investigations remains the No. 1 priority, and the two companies that took on the USIS absence have increased their capacity, and we are in close coordination with them weekly. I know that we receive weekly updates as they continue to increase their capacity. Senator Portman. This is going to be a big challenge for you. We look forward to working with you on it, and we hope you will take a look again at some of the work we have done, some of the hearings we have had. With regard to cybersecurity, I mentioned in my opening statement that this is another issue we have spent a lot of time on. These threats continue to grow, and they are not just growing in terms of the quantity but also the quality of the attacks, and, therefore, we need a highly skilled cybersecurity workforce to be able to deal with them. One of the things that I have been concerned about in particular--that we do not know what the current capability is of the Federal Government. We have tried to figure out, what skills we have in the current workforce. There was a 2011 U.S. Government Accountability Office (GAO) report that found that agencies are facing significant challenges in this because the size and composition of the cybersecurity workforce is like comparing apples to oranges. There is not a common lexicon on how do you define the work. There are not common job codes. And so agencies are struggling to even know what they have and then certainly what they need in terms of personnel. So we are looking for some help here, maybe a uniform classification for job functions, specific employment codes, so that agencies can map out the Federal Government's workforce to identify what the skill shortages are and where they might be able to help other agencies if they have a surplus. The full Committee recently passed an amendment to help with this, and, again, I am working on this proposal with Senator Bennet and others called ``The Federal Cybersecurity Workforce Assessment Act.'' From your perspective, what are some of the challenges the government faces in terms of cyber workforce needs? Admiral Gay. Well, as you stated, sir, the cybersecurity area is one of the skill gaps that we must close, and that has been identified. What I plan on doing is to personally engage the Chief Human Capital Officers (CHCO) Council--the CHCOs of each agency--to ensure that they are invoking the correct applications to seek out those with those critical skills. And so from my military background, I am very well aware of and appreciate the importance of cybersecurity. Out in the fleet, it is absolutely vital that we preserve it because to lose it could cause damage or it could be a matter of life or death. So I take it very seriously. So I am looking forward to getting engaged with those efforts, sir. Senator Portman. OK. My time has expired, so I want to turn it back to the Chairman, but I do think this is an area where having a new Deputy will be really important, and we want to work with you on this to try to find out what we need and then close that gap as quickly as possible. Thank you, Mr. Chairman. Senator Tester. Thank you, Senator Portman, and once again, it is good to have you here today, Admiral Gay, and a special welcome to your wife. Thank you for coming to this hearing. I guess the first question would be: Why do you want this job? Admiral Gay. Well, sir, I have worn the cloth of our Nation since 17, and I retired last December. I am used to being on a team, and I like to work with people that are driven. I just think that this is a natural progression for me to continue to serve my country. Senator Tester. So as I referred to in my opening statement, the morale of the Federal workforce it is low. It may be as low as it has ever been. And the question is: There are some issues that revolve around it when you have low morale. Recruiting becomes a problem; retention becomes a problem. And these jobs are important. You have spent a career in the Navy. Do you have any ideas on what we could do to improve morale or what we could do to better recruit and better retain employees? Admiral Gay. Well, yes, sir, I do. Again, based on my experience--I will tackle recruiting first and then retention. In recruiting, I personally have used the USAJOBS website before, and it has vastly improved from the last couple of years. But I think we can get better. I think we at OPM can help the agencies better craft their announcements. Also, in the area of strategic recruitment to find out where the IT specialists are and so on and so forth. We had the same issues in my previous job. One of the critical occupations was nuclear power, and so we had to go out and seek those pools to see where the talent was at. I think that is one area that I am looking forward to engaging in from my past experience. As far as retention goes, I think we need to increase employee engagement, empower the employees to make sure that they feel empowered to be a part of the team, and that involves, in my mind, increasing efforts in developing their careers and training, by offering them training opportunities to succeed in the individual agencies. Senator Tester. OK. Veteran employment is about 30 percent of the civilian workforce, and it has been rising over the last few years. A lot of credit can be attributed to the Administration's Veterans Employment Initiative, which has the goal of enhancing recruitment and retention and promoting employment opportunities for veterans. Can you provide an update on that initiative? Admiral Gay. Yes, sir. As I stated before, that is one of the areas that I am closely, intimately involved with, and we have increased our veterans' new hiring. From 2009 to 2013, it rose from 24 percent to 31 percent. We still have to get better. There are a lot of initiatives out there, and we are currently working with the agencies. We have an Interagency Veterans Employment Initiative Council that meets monthly. One of my assignments is to become co-chair of the working group to advance their efforts. Senator Tester. OK. So would it be fair to say you think we are heading in the right direction? Admiral Gay. Yes, sir. I think the needles are moving in the right direction. That said, through, Director Archuleta in her various travels around the country, we also have noted that there will also be a 57-percent increase in women veterans coming into the workforce. Senator Tester. Yes, correct. Admiral Gay. So we are leaning forward in our efforts. We meet with the women veterans organizations to ensure that all veterans have equal opportunity to come and join our workforce. Senator Tester. OK. So in the hiring process of veterans, do you see any major challenges that still need to be addressed? Admiral Gay. In my opinion, as a new veteran, I plan on ensuring that the veterans better translate their military skills to civilian skills. We are also involved with helping them with hiring and interview training as well. Senator Tester. OK. Senator Ayotte. OPENING STATEMENT OF SENATOR AYOTTE Senator Ayotte. Thank you, Mr. Chairman. I want to thank you, Admiral Gay, and your wife for your willingness to serve and your prior service to the country. I wanted to followup on what Senator Tester just asked and your last answer. As I understand it, the area that we can also all work on together is that our veterans have incredible skill sets and how do we translate the understanding of those skill sets to a civilian sector position. So some of the things that are being done by our military, whether it is out in places like Afghanistan or even home side, making sure that the civilian sector understands what type of leadership skills that means, what kind of skills and training they got for that, so any thoughts you have on how we can work on that together I think is really important. Admiral Gay. Yes, ma'am. Right now I think the main impetus is to ensure that the agencies know the skill sets that these veterans bring to the table. As you mentioned, there are a lot. Senator Ayotte. Right. Admiral Gay. Including leadership. Some attempt to quantify leadership, because it is a multiplier. It really is. Senator Ayotte. Well, thank you. I appreciate that. I think that is really important given what our veterans can bring from their experiences to our civilian workforce, to the Federal workforce. I wanted to follow-up on the issue of security clearances, and I know Senator Portman had asked you in particular about the backlog that we have, addressing that backlog of security clearances. And what I wanted to followup on is another question related to the security clearance question, and that is the insider threat. So whether we saw a situation like Edward Snowden or Aaron Alexis, both who happened to work with the Federal Government but in a contract capacity, and as the background clearance system works right now, if you have a Top Secret clearance, you are reviewed every 5 years; Secret is about 10 years; and then Confidential is about 15 years. One of the things I have introduced with a number of my colleagues on this Committee and outside the Committee has been to introduce the idea of random audits in that process, because right now it is much more a self-reporting-oriented process. But as you know, a lot of things can change in people's lives, even over the course of a 5-year period, and never mind what can change over the course of a 15-year period. What are your thoughts on how we can work to better--not only address this backlog, which is critical, but also to address the issue of insider threats? I wanted to get your thoughts on the idea of random audits and any other thoughts you have on how we can do better in this regard. Admiral Gay. Yes, ma'am. The Suitability and Security Clearance Performance Accountability Council (PAC) has come out with 13 recommendations, and the areas that you just spoke of were covered in resolving those issues, including continuous evaluation. And so the Director of National Intelligence (DNI), OPM, the Office of Management and Budget (OMB), and other agency partners are authoring recommendations to improve that. Continuous evaluation is very important, having held a security clearance myself. And also decreasing the periodicity of the secret checks to 5 years, I personally feel that is an important move. So I am quite certain that I will spend a bulk of my time implementing those recommendations, ma'am. Senator Ayotte. Great. I appreciate that very much. And, finally, I just wanted to ask you, Senator Warner from Virginia and I recently co-authored a book chapter together, and the book is actually called ``Moneyball for Government.'' It is about how to make government smaller and smarter by using actually performance data to evaluate how well programs are doing and measuring programs. It is a really simple concept about how we need to measure what works and what does not work in order to know what policies to implement and what investments to make, especially as we look at a constrained environment. So the GAO released a report in September that reported that a lot of agencies are not using this kind of data to make decisions, but OPM is actually one of the two agencies that has improved its use of performance data. How will you in your role as Deputy Director make sure that OPM is doing all that it can to assure that it continues to use this performance data and really becomes a role model for other agencies on this? Admiral Gay. Yes, ma'am. As you stated, OPM is intimately involved with that. We consider ourselves the thought leader for data-driven metrics. So I plan on personally engaging the agency leadership--although Director Archuleta has been very forward in dealing with Cabinet members, I see myself as connecting personally with the other agency leadership to ensure that they have all the tools that they need. There are a lot of tools out there that are available, and so my job is to find out, one, if they know about them and, two, why aren't they using them. Senator Ayotte. Great. Well, thank you very much. I appreciate it. Admiral Gay. Yes, ma'am. Senator Ayotte. Thank you. Senator Tester. Senator Portman. Senator Portman. Thank you, Chairman Tester. I was going to talk a little about health care. I mentioned in the opening that it is one of your big responsibilities at OPM, and particularly in this new role, you are going to be asked to weigh in on a lot of these issues. You administer, as you know, the largest employer-sponsored health care plan in the United States of America, the Federal Employees Health Benefits (FEHB)--and its $45 billion in annual costs, and 8 million individuals. Healthcare is obviously a very complicated issue, but specifically this plan puts OPM right in the middle of one of the tough issues to manage these days, costs and quality. One question for you is: Can you give us a sense of your background in this? You go into this job with, again, a great military background, but do you have any background in managing health care programs, in particular managing change or reform efforts within health care? Admiral Gay. Well, as far as health care is concerned, throughout my career I have been responsible for Sailors and Marines, but not only them but their families as well. And so I am well versed in it. As far as the meticulous management of health care plans, I have not been involved with that, but I have been involved with oversight and management of budgets and also strategic plans and campaigns. So I think those rich experiences will bode me well as I delve into this new area. Senator Portman. Admiral, I do not know if you have seen the President's proposal for the Federal Employees Health Benefit Plan, but he has basically said he would like to enable you at OPM to be able to contract out beyond those insurance companies that are currently in the FEHB. The Congressional Budget Office (CBO) has given us two very different scores in the President's last two budgets. The first budget they said it is actually going to cost a lot of money, and the second one they actually said that it is likely to have a savings of about $300 million. And we have been asking CBO to give us a detailed explanation of that. They really cannot. So let me ask you this: Are you aware of that? And how do you feel about it? Do you think that is a good idea to permit OPM to contract with new types of health plans that do not currently participate in the Federal Employees Health Benefit Plan? Admiral Gay. Yes, sir, I have not read the CBO report--I will read it--but I agree with the proposal. Senator Portman. Great. I think it sounds interesting, and I think it might give us some opportunities to allow employees some different kinds of plans than are currently there. I see that John Lewis has arrived. I described you earlier as ``my friend John Lewis,'' and it is rare that you actually get a visa to come over to this side of the Capitol, so this is a big deal. But welcome, and I will allow the Chairman to give you a proper introduction. Senator Tester. Well, I do not know if it will be proper or not, Ranking Member Portman, but I would just say welcome to John Lewis. Welcome to the side where only good and proper things happen in Congress. It is great to have you over here advocating for Rear Admiral Gay. The floor is yours. OPENING STATEMENT OF THE HONORABLE JOHN LEWIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA Mr. Lewis. Well, thank you very much, Mr. Chairman. Thank you, my friend. We have been knowing each other for a long time, and I am glad that you extended me a visa to come over. I am delighted to be here to introduce--and I know he does not need an introduction--Rear Admiral Earl Gay, who was a neighbor of mine. I no longer live in the same neighborhood, but we lived in the same neighborhood for many years, and your parents still live in the neighborhood. And I am honored and delighted to be here to say a few words about this young man, the Presidential nominee for Deputy Director at the Office of Personnel Management. I apologize for being late. On the House side, we are organizing our committees and trying to go to work. I frequently run into my neighbor in the airport when he is heading home to visit his proud parents. This young man is very active and very involved. I see him just moving all the time. He is a proud native of the Venetian Hills neighborhood where I lived for more than 36 years in the same house. And I decided to be closer to the airport, a lovely neighborhood but I wanted to not drive so much on those highways and roads and streets in Atlanta and decided to move. He graduated from the Naval Academy in 1980 and completed flight training at the Pensacola Naval Air Station the following year. Throughout his career he continued to further his education. In addition to earning a master's degree in financial management from Troy State University, the university--you probably did not attend the site, but it was only 10 miles from where I grew up. When I was 17 years old, I wanted to attend Troy State, but I was denied admission because they did not admit African American students. And to be here today to introduce you as a graduate of Troy University says something about the distance we have come and the progress we have made in laying down the burden of race. So it is a great honor to be here. You also attended the Joint Forces Staff College and the business school at the University of North Carolina. Admiral Gay's Navy career took him from Atlanta across the country and around the world, deployed twice to support combat action in the Middle East, and his unit colleagues were repeatedly recognized with the Battle Efficiency ``E'' Award. His leadership and experience on the homefront is just as impressive. Rear Admiral Gay was the Navy's congressional liaison officer in the U.S. House of Representatives, after which he was appointed as the 86th Commander of the Naval District Washington and Deputy Commander of the National Capital Region Joint Force Headquarters. Rear Admiral Gay then moved across the country to San Diego, California, where he commanded the Expeditionary Strike Group 3 before serving as Commander of the Navy Recruiting Command until 2013. Following his retirement from an esteemed Navy career, Rear Admiral Gay returned to Washington, DC, to advise the OPM Director, and after three decades, he still wants to contribute more to our great Nation. Again, I thank you, Mr. Chairman and Senator Portman, for hearing me and allowing me to come here to say just a word and to introduce Rear Admiral Gay, a neighbor and a son of Atlanta, a son of Georgia, to you and to the Members of this Committee. I hope that you will find him to be a strong nominee for the position of Deputy Director of the Office of Personnel Management. Thank you, and I yield back. Senator Tester. Thank you, Congressman Lewis. Thank you for the kind introduction, and you are welcome anytime on this side--providing he has the right paperwork. No, it is good to have you here, and you are welcome anytime. Mr. Lewis. Well, thank you for having me, and you all come over to see us sometime. Senator Tester. Yes, we will do that. Thank you very much. Mr. Lewis. Come by and visit my office. We can offer you some peanuts and a Coca-Cola from Georgia. [Laughter.] Senator Tester. Well, Rear Admiral Gay, that was a great introduction by your friend Congressman Lewis. I have a few more questions, and we talked about this in my office a little bit. It deals with the issue of locality pay where, in some areas of this country, there is much more demand on the workforce. It is harder to get them. One of those areas is the Bakken, which is in eastern Montana and western North Dakota right now, where to get an engineer or to get anybody, it costs more than just about anywhere else in the country. In fact, I think Williston, North Dakota, was the most expensive place to live in the country, believe it or not. So that tells you what wages are. When I had a hearing out in Sidney, Montana, they were talking about the rent for a one-room apartment that was somewhere between $2,000 and $2,500 a month. So it is pretty crazy. So the pay has to reflect that cost of living. Do you believe you have adequate flexibility to utilize locality pay, to be able to bump it up, to be able to get the people we need in areas like the Bakken? And the Bakken is not the only place, by the way. There are other areas like that in the country. Admiral Gay. Yes, sir, locality pay in my opinion would be the long-term solution. A short-term solution, as Director Archuleta visited out in the Minot area, is to use the existing pay flexibilities where the three R's, as we call them, recruitment, retention, and relocation bonuses at one time to retain those great workers. All of those could be done without OPM approval. If that does not help out in those efforts, they can request through the applicable agencies special salary rates. And we found out last night that the Department of Interior has submitted that special salary request to OPM. So we are looking into that, yes, sir. Senator Tester. OK. So currently I believe there is a 2,500 Federal employee threshold to be considered a metropolitan area so that you can utilize locality pay. Of course, we are talking about areas that are very rural, where the Federal workers cost more than they should, quite frankly, because of the demand in the private sector. Can you figure out a way to make locality pay or do you need our help to do that or can you do that through rural or can you do it--how can you do it to make it work in the rural areas? Admiral Gay. Yes, sir, I think that would require all of the agencies involved, including the Bureau of Labor Statistics (BLS), the Department of Labor, and I am willing to engage in that conversation, sir. Senator Tester. OK. The number of Federal workers retiring this year is double from 2009. As many as one-third of the Federal workforce will be eligible for retirement in 2017. That is not very far off. OPM's paper-based system has a significant backlog that leaves retirees waiting a long time, as long as a year, for their retirement paperwork to be processed. Can you give me an idea on what OPM is doing to modernize the retirement processing system? Admiral Gay. Yes, sir. Since I have been there, I have had the opportunity to work with Ken Zawodny and ask questions about our efforts at improving that time, decreasing that time. And as part of our strategic IT plan, we are procuring an electronic case management system. We are now in the last stages of the Request for Proposal (RFP) stage, to implement that. We are also looking at improving our customer service standards because the surveys that we have taken--and we take them seriously--found that those retirees that conduct business online are very satisfied. So we are trying to drive a lot of our customers to the online usage as well. Senator Tester. OK. Thank you. Senator Portman. Senator Portman. Admiral, I want to talk for a second about administrative leave. The GAO released a report recently--it was October--about the Federal agencies that have abused the lack of guidelines, clear guidelines regarding administrative leave. And as you know, administrative leave is paying employees not to work. The GAO report said that the most extended administrative leave is a result of agency adjudication of alleged employee misconduct or criminal activities. So it is for various things, but a lot of it is for misconduct. They also said some of it is for physical fitness activities, rest and recuperation for overseas employees. But it looks like from this report a lot of it is, an allegation of misconduct that has not been yet resolved, and so people go on administrative leave. And during that time they get their pay. They also get further accrued time toward their pension and for their vacation time. Fifty-seven thousand Federal employees were placed on paid administrative leave for a month or longer in fiscal years 2011 through 2013. Four thousand employees were on administrative leave for over 3 months, 3 months to 12 months. Over 260 were on leave for 1 to 3 years. And, again, unlike medical leave, family leave, vacation leave, most of them were on paid administrative leave, according to GAO, for alleged misconduct. So this seems to be something where OPM needs to get engaged and involved, and, we are looking at this on our Subcommittee, obviously, but it is kind of a backward incentive system. By the way, that cost is about $700 million, over $12,000 per employee. One, are you aware of this? But, two, do you have any plan to develop new guidance regarding the recording and reporting of paid administrative leave? Admiral Gay. On the administrative leave, our current policy is unless the member poses a threat on themselves or the work environment, that member is expected to return back to work in a duty status. To me, duty status means being productive. That said, the leadership of each agency has the inherent authority to manage their employees time. Again, I plan on personally engaging the agencies to find out how we can better provide them tools. Senator Portman. I like the idea of, while something is pending, having people work if they do not, again, create a danger to others. And one thing this report leads me to wonder is, can we streamline the adjudication process, too. When you have people out of work for months and in some cases a couple years waiting to get some misconduct resolved, it seems like we have a problem on timeliness of resolution of these alleged misconduct investigations. So what guidance would you as Deputy Director recommend agencies on this topic of adjudicating more quickly? Admiral Gay. Yes, sir, the performance management system that we have in place is not complicated, and it is based basically on the system that I am accustomed to in the military, and that is holding people accountable for performance: first of all, defining what the plans are and the mission set; second, articulating the expectations on all sides; and, third, throughout the process making sure that you provide feedback to the employees on their performance and documenting that feedback. If you do those three basic things, I think that we could preclude a lot of the issues, and the tools are there. We provide classroom training. We provide website instruction. And the agencies get together to talk about these. So that is one area that I plan to get personally involved with, speaking with some of the agency leadership on, because the tools are there, sir. Senator Portman. Great. Well, thank you for coming before us today and answering these questions, and your willingness again to step forward and serve your country again, this time in a little different capacity. I found it particularly interesting, as someone who is now in his late 50s, that our friend John Lewis called you a ``young man'' twice. Admiral Gay. Yes, sir. He is an American icon and one of my personal heroes. Senator Portman. He is an icon. But I thought that was very nice of him to call people of our generation ``young men.'' But we are glad that a man like you is willing to step forward to take on this task. And as I said, there are lots of challenges. You are jumping into a really difficult situation with all the potential retirements and actual retirements that the Chairman talked about, and the difficulty of attracting some of the talent to deal with the cybersecurity issue, and then some of the other issues we talked about that are just endemic to government where health care and all the other benefit programs, but also how do you be sure that the taxpayers are getting their money's worth. So we look forward to working with you on these and other issues. Thank you, Mr. Chairman. Senator Tester. Thank you, Senator Portman. I just want to followup just a little bit on the administrative leave stuff, because I do not think it is going to happen unless you are very proactive on it. I think the figures that Senator Portman put out, $12,000 per person of the ones who got administrative leave, this is the kind of stuff that drives taxpayers crazy and it drives people like Senator Portman and me crazy, too. The truth is that if you have the tools, I would just say use them. I think these agencies need to be educated on what is right, and if you are paying somebody not to work, there better be a very good reason for it. And I think you gave a couple good reasons, harm to others or themselves; otherwise, they ought to be working. In closing, I just want to say one thing. For the last 2 years, we have had a chance to work with Senator Portman as Ranking Member on the Subcommittee on the effectiveness and efficiency of government, and I just want to for the record say it has been a pleasure. I do not know what is going to happen in this next Congress, but if I get to be a Ranking Member on a Committee that you are chairing, I look forward to that opportunity. So thank you, Senator Portman. Senator Portman. Could you indulge me for just a minute? Senator Tester. Sure. Senator Portman. It is funny. I was thinking the same thing earlier, that it has been great working with Senator Tester. He is no-nonsense, kind of gets to the point, calls everybody by their first name except for you, Admiral. You are the first one. That is a Montana thing. And I do not know where I am going to end up, on which Subcommittee, but I hope we will get to work together again. And, if I am fortunate enough to chair one of these Subcommittees, I am going to be lobbying you to come on as the Ranking Member. Thank you. Senator Tester. Well, for the record, I look forward to that, Rob. In closing, I will just say thank you, Rear Admiral Gay, for appearing before us today, for your opening statement, for your answers to our questions, for your confirmation as OPM Deputy Director. Without objection, the record will be kept open until 5 p.m. tomorrow for submission of any written questions or statements for the record. With that, I would say this hearing is adjourned. Once again, thank you. [Whereupon, at 3:22 p.m., the Committee was adjourned.] A P P E N D I X ---------- [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [all]