2
Reducing the Hurdles and Disincentives

At a time when scientific knowledge and technical expertise are becoming ever more critical in government leadership positions, it has become more difficult to attract top talent to the public service. The hurdles a prospective candidate must cross have become higher and more numerous, turning the presidential appointment process into an ordeal that fewer and fewer of the most highly qualified scientists and engineers are willing to undergo. Many of those who do serve must make large financial sacrifices, suffer loss of privacy, and risk unjustified accusations of scandal.

The major hurdles include: postemployment restrictions that are becoming too broad in application; the cost of complying with conflict-of-interest interpretations; the perception of inappropriate ideological "litmus tests"; inadequate compensation; the belief that it is much harder to accomplish anything in and through government; and the lengthier and more burdensome appointment process.

Ethics rules have increased in scope and detail, largely in response to a series of defense procurement scandals, and have imposed substantial restrictions on postgovernment employment choices, types of financial holdings, and outside earnings. Some progress has been made in the areas related to pay, tax treatment of assets that must be divested, and moving expenses, but the costs of taking a federal job and living in Washington are still high and discourage some who want, but cannot afford, to serve. Finally, the burden of substantive and procedural requirements imposed by the appointment process has increased substantially in recent years and should be reduced. The forms and procedures have become more complex and time-consuming, introducing increased uncertainty and delay in the nomination and confirmation process.

Partly as a result of these hurdles and disincentives, fewer scientists and engineers consider serving as presidential appointees, as noted in chapter 1. Recruiters are experiencing increased numbers of turndowns before they find willing candidates. Turnover is high. Important posi-



The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement



Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.

OCR for page 31
Science and Technology Leadership in American Government: Ensuring the Best Presidential Appointments 2 Reducing the Hurdles and Disincentives At a time when scientific knowledge and technical expertise are becoming ever more critical in government leadership positions, it has become more difficult to attract top talent to the public service. The hurdles a prospective candidate must cross have become higher and more numerous, turning the presidential appointment process into an ordeal that fewer and fewer of the most highly qualified scientists and engineers are willing to undergo. Many of those who do serve must make large financial sacrifices, suffer loss of privacy, and risk unjustified accusations of scandal. The major hurdles include: postemployment restrictions that are becoming too broad in application; the cost of complying with conflict-of-interest interpretations; the perception of inappropriate ideological "litmus tests"; inadequate compensation; the belief that it is much harder to accomplish anything in and through government; and the lengthier and more burdensome appointment process. Ethics rules have increased in scope and detail, largely in response to a series of defense procurement scandals, and have imposed substantial restrictions on postgovernment employment choices, types of financial holdings, and outside earnings. Some progress has been made in the areas related to pay, tax treatment of assets that must be divested, and moving expenses, but the costs of taking a federal job and living in Washington are still high and discourage some who want, but cannot afford, to serve. Finally, the burden of substantive and procedural requirements imposed by the appointment process has increased substantially in recent years and should be reduced. The forms and procedures have become more complex and time-consuming, introducing increased uncertainty and delay in the nomination and confirmation process. Partly as a result of these hurdles and disincentives, fewer scientists and engineers consider serving as presidential appointees, as noted in chapter 1. Recruiters are experiencing increased numbers of turndowns before they find willing candidates. Turnover is high. Important posi-

OCR for page 31
Science and Technology Leadership in American Government: Ensuring the Best Presidential Appointments tions remain vacant for longer periods. It is becoming increasingly rare to recruit those in midcareer rather than the very young or those approaching retirement, because the costs for those with children in college—and who face significant postgovernment employment restrictions—are very high. Several hurdles have been lowered recently. The Ethics Reform Act of 1989 permits candidates who have to resolve conflicts of interest by divesting stocks or other assets to convert or "roll over" the proceeds into a neutral investment vehicle, such as a diversified mutual fund, rather than pay capital gains taxes on them all at once. The same act also mandated a substantial increase in executive pay levels—35 percent by the beginning of 1991—and established new mechanisms for ensuring that salary levels continue to increase annually with inflation. Overall, however, the situation is worsening as other hurdles—substantive and procedural—increase in number and size, and they counteract the pay increases and helpful tax changes. As a result, governmental capacity to plan, implement, and evaluate S&T-intensive programs is deteriorating. Continued leadership of the United States in such areas as biotechnology, manufacturing, medical sciences, space, energy, and defense is threatened. TOWARD REASONABLE AND EFFECTIVE ETHICS RULES The post-Watergate period has yielded a steady flow of new laws and regulations intended to improve the integrity of the federal government. Some of these—especially the requirement for public financial disclosure and the prohibition on participation in any particular matter in which a federal employee has a financial interest—make good sense. But the efforts to achieve a scandal-proof government have gone too far and, on balance, do more harm than good by deterring talented and experienced scientific and engineering personnel from taking senior government positions. Some of these ethics reforms, especially recent attempts to purify the procurement process by imposing broad postgovernment employment restrictions, afford little ethical protection at very high cost—a bad bargain for the government and a bad bargain for the public. Presidential appointees and other government officials must be held to the highest ethical standards in their conduct affecting public business, and breaches should be vigorously punished. Public officials should be fair and impartial and avoid favoritism. They should not involve them-

OCR for page 31
Science and Technology Leadership in American Government: Ensuring the Best Presidential Appointments selves in matters that affect themselves or those with whom they have family, friendship, or business ties. They should devote themselves to furthering the public interest. They should avoid situations or actions that may even appear to be affected by personal or special interests. Ethics laws and rules should not be so onerous, however, that they unduly deter highly qualified scientific and technical specialists (or other needed experts) from serving in the federal government. Government needs the fresh perspectives and new ideas of top scientists and engineers who take several years from their careers in academia and industry to serve in important scientific and technical positions. The challenge is to design a set of rules and procedures that allow the in-and-out system of S&T governance to work effectively while preventing it from becoming a revolving-door situation in which individuals enrich themselves unfairly by exploiting information and contacts they gained while in the government. The need for ethical integrity in government must be balanced with the country's great need for a constant flow of fresh and talented leadership from the private sector. Some of the most important hurdles are conflict-of-interest laws that have proliferated piecemeal in response to specific scandals. The integrity of government and public trust in government must be maintained, but, as a nation, we also pay a high cost if top leadership positions are not filled by the most qualified and experienced experts. The panel concluded that the unintended costs of broader conflict-of-interest restrictions—particularly those dealing with post-government employment—have reached the point where they substantially outweigh their benefits. We believe, however, that it is possible to have fair and effective conflict-of-interest laws that are compatible with, indeed would promote, public service by highly qualified and motivated individuals from industry, academia, and other sectors who are on the cutting edge of science and technology. Postgovernment Employment Restrictions According to presidential recruiters, as well as scientists and engineers who have been approached by recruiters, the laws restricting postgovernment employment have become the single biggest disincentive to public service, now that pay levels have been increased substantially. Overlapping, confusing, and in some respects overly broad postemployment restrictions that were suspended with the passage of the 1989

OCR for page 31
Science and Technology Leadership in American Government: Ensuring the Best Presidential Appointments Ethics Reform Act have come back into effect over the last year, and there is constant pressure to broaden the restrictions further by banning officials involved in specific procurement actions from working in any capacity for any competing contractors for periods of one, two, or three years. A particularly damaging feature of some recently imposed and proposed restrictions is that they often treat presidential appointees who have broad procurement oversight responsibilities as having participated personally and substantially in a wide range of contract determinations under their official jurisdictions. As a consequence, such high-level appointees may be effectively barred from immediate postemployment opportunities with many or all of the firms or institutions at which they could practice their career specialties. Thus, these postemployment restrictions have become the biggest problem in recruiting high-level scientists and engineers. Many important areas of S&T involve relatively few companies who have bid on government contracts and already do government work. Accordingly, broad postemployment restrictions can make it virtually impossible for specialized individuals to continue their career in their area of expertise. Recommendation A-1. Government postemployment restrictions should be revised to balance the public's interest in ensuring the integrity of government operations with its interest in attracting the best talent to government service. Laws overlapping and conflicting with basic postemployment restrictions in 18 U.S.C. §207 should be repealed. The basic laws governing postgovernment employment should be revised and codified in 18 U.S.C. §207. The fundamental aim of postemployment restrictions should be to regulate improper conduct directly rather than to ban employment with particular employers per se, as has been done with certain DOD officials since 1985 and as has been proposed in Congress for governmentwide application. Instead, section 207 should be revised to include restrictions on improper postemployment conduct, to curb improper influence not only by prohibiting personal representation but also by prohibiting use or disclosure of specific types of inside information, such as that which is integral to source selection. Subject to these restrictions, participation in work under contracts should be allowed, so that the government may benefit from the expertise of its former employees. To the extent that a ban on employment has to be adopted, it should be of short duration and narrowly applied to officials who have had substantial personal involvement in

OCR for page 31
Science and Technology Leadership in American Government: Ensuring the Best Presidential Appointments awarding or administering a contract. Current provisions for waivers and exemptions from postemployment restrictions of section 207 and other laws that apply to critically needed scientific and technological experts and employees of the national laboratories should be used to the fullest extent needed. Finally, federal executives should be able to obtain "safe harbor" opinions from agency ethics officials regarding the applicability of postemployment restrictions in their cases. The administrative burden of providing such opinions would be reduced greatly if the postemployment provisions were revised and combined into a single, coherent set of laws, as recommended. The basic postemployment law is in 18 U.S. Code §207. The section was thoroughly revised in 1989 in response to recommendations of the President's Commission on Federal Ethics Law Reform (1989:Ch. 4) that there be a comprehensive and uniform postemployment statute covering former personnel of the legislative and executive branches (earlier codifications were carried out in 1962 and 1978). As amended by the Ethics Reform Act of 1989, section 207 strictly limits former government employees in representing private parties before their former agencies and in participating in matters in which the former employees were involved personally and substantially while in government (the basic restrictions are laid out in Appendix C). However, despite the intent of the 1989 act to reestablish a comprehensive and uniform set of conflict-of-interest laws, at least four other sets of statutes affect the postgovernment employment activities of federal R&D officials. These are the Procurement Integrity Act of 1988 and several provisions that affect officials of the Departments of Defense and Energy specifically (see Appendix C for details). Recognizing that they overlapped and conflicted with the new and expanded governmentwide ethics law, Congress temporarily suspended these additional laws to allow time to consider their repeal or revision. At a congressional hearing held in February 1991 to consider the administration's proposal to repeal the overlapping laws, officials from the Department of Defense, Department of Energy, and the National Aeronautics and Space Administration testified about the problems that the Procurement Integrity Act of 1988 had caused in their efforts to recruit and retain highly qualified personnel (summarized in Appendix C). Despite this testimony, no agreement was reached on revising or repealing the suspended laws, and they came back into effect in December 1991 and June 1992. Recurring scandals remind us that rules against unethical conduct

OCR for page 31
Science and Technology Leadership in American Government: Ensuring the Best Presidential Appointments are needed to protect the government's integrity and assure public confidence, but care must be taken to see the value of additional restrictions is weighed against their negative effects on the recruitment and retention of highly qualified federal officials and employees. The panel discussed at length at each of its meetings the extent to which postemployment restrictions go too far in limiting career choices and thus unnecessarily deter highly qualified experts from serving in important S&T leadership roles. We concluded that, with the addition of legislation protecting procurement-sensitive information, the current restrictions in 18 U.S. Code §207 and adjacent, related sections are reasonable and appropriate in protecting the public's interest in assuring ethical conduct of former and current federal officials and at the same time in assuring a refreshing flow of top scientific and technical talent from the private sector and back. The other provisions affecting specific departments or officials can, in our judgment, be repealed. Postemployment restrictions have three purposes (President's Commission, 1989:53). First, they should prohibit improper influence by former officers and employees. Former officials should not be able to "switch sides" on the same matter and use their influence with former colleagues to secure an advantage for their new employers. Second, they should not disclose sensitive government information gained in the course of government service to benefit themselves and their new employer. Third, they should not curry favor to increase their employment prospects by using their official capacity while in government to benefit a prospective employer. 18 U.S.C. §207 includes several prohibitions against switching sides and use of influence, including the lifetime ban on representation with respect to particular matters involving a specific party, such as a contract or claim, in which the former official participated personally and substantially. Section 207 also contains a one-year ban on communications by former officials at level GS-17 or above made with intent to influence their former agencies and a one-year ban on any communication by former cabinet secretaries or high White House officials made with intent to influence their former agency or any executive-level officials. Section 208 of 18 U.S.C. requires federal employees negotiating for other employment to disqualify themselves from participation in procurements or other particular matters affecting the prospective employer. Several of the statutes recommended for repeal impose additional restrictions to discourage improper influence and use of inside information—the Procurement Integrity Act, the DOD revolving door laws, and

OCR for page 31
Science and Technology Leadership in American Government: Ensuring the Best Presidential Appointments the DOE act. Under the procurement integrity law, for example, former federal employees are prohibited from assisting behind-the-scenes as well as by personal representation in the negotiation or modification of contracts they were involved in as federal employees, and they are prohibited from performing any work under such contracts. Under 10 U.S.C. §2397b, certain mid-and high-level DOD officials are prohibited from working for contractors at all for two years if they were involved in certain procurement-related functions with those contractors during their last two years in government. The intent of these laws is to prevent the use of inside information by former officials, but the public interest would be better met by a new statute that identified the types of sensitive information that should be protected from unauthorized disclosure or receipt. This direct approach is preferable to an indirect attempt to prevent unwanted behavior by broad bans on postgovernment employment or activities. Although such bans may reduce the opportunities to disclose source-selection or bid and proposal information, they also prohibit a broad range of activities based on knowledge and skills that are not related to involvement with particular procurements while in the government. Former federal officials who are highly qualified scientists and engineers are therefore prevented from undertaking perfectly legitimate activities in the course of practicing their professions. As a result, the government's ability to recruit and retain highly qualified personnel for tours of duty in top S&T positions is unduly restricted, and the public interest suffers. The flat ban on performing any work under a contract for two years is also overly restrictive and may deprive the government of expertise needed to fulfill contract goals. The panel opposes even wider application of broad approaches to such an important and difficult set of issues, for example, extending the two-year postgovernment employment ban from DOD to the entire government. Consolidation and Periodic Review of Ethics Laws The government's conflict-of-interest and other ethics laws should be fair, clear, and consistent. Currently, the laws—especially those concerning postemployment restrictions—are overlapping and inconsistent in content and in their application to comparable agencies, making them hard to understand or enforce. The resulting uncertainty makes it difficult for the Office of Government Ethics, designated agency ethics

OCR for page 31
Science and Technology Leadership in American Government: Ensuring the Best Presidential Appointments officials, or personal legal advisors to tell appointees what restrictions and bans they will be subjected to. This uncertainty often deters candidates from agreeing to be nominated. There is no mechanism for periodic review of ethics laws to see if they work or are worth their cost and whether they need to be updated in response to changed conditions. This situation perpetuates the existence of multiple ad hoc measures that are inconsistent with each other and create unnecessary hurdles in the appointment process. Recommendation A-2. To ensure clear understanding and more effective enforcement, the federal ethics laws should be streamlined and clarified as soon as possible, and they should be contained in a single comprehensive section of the U.S. Code. They should then be evaluated periodically for their impact and effectiveness in ensuring ethical conduct with as little negative effect on recruitment and retention of scientific and engineering personnel as possible. Overlapping laws should be repealed immediately. Clear and consistent ethics laws would let appointees know what is expected of them. This would increase compliance and improve any enforcement that is needed. This consolidation, which could be based on the work of the 1989 President's Commission on Federal Ethics Law Reform, should commence immediately. Subsequently, periodic evaluations should be carried out with—and needed revisions suggested by—a commission appointed by the President, Senate, and House of Representatives. The commission should consist of representatives from the executive and legislative branches and the private sector (academia, industry, nonprofit), and it should report publicly every ten years (or more often if necessary). There is a natural tendency to react to each government scandal by adopting a specific law or executive order, which has resulted in the maze of rules and regulations that are difficult to understand, administer, and enforce and that deter candidates for federal positions. New laws should be considered not only for their specific purpose but also for their net effect on the overall ethics system, including their impact on the quality of the public service. The bipartisan President's Commission on Federal Ethics Law Reform performed a valuable service in proposing a comprehensive revision and consolidation of executive branch ethics laws and rules, which was largely implemented in the Ethics Reform Act of 1989 (the first comprehensive update since the Ethics in Government Act of 1978). While not perfect, the Ethics Reform Act is a workable law that on

OCR for page 31
Science and Technology Leadership in American Government: Ensuring the Best Presidential Appointments balance imposes a set of reasonable standards and procedures, especially if it is revised in accord with Recommendation A-1 and if conflicting laws are repealed. Federal ethics laws should be periodically evaluated, however, and, if necessary, revised through a careful and deliberative process that involves the affected parties. If an ethics commission were created that met periodically, say, every ten years, the pressure to react hastily to each new scandal with a new law would be alleviated. Reasonable Resolution of Substantive Conflicts of Interest Some candidates for presidential appointments own stocks and other assets that pose a potential conflict of interest if the candidates's official actions may affect or appear to affect the value of such an asset. This situation is more likely to pertain to individuals recruited from industry to fill top S&T positions in the energy, defense, and space areas than to those recruited to fill executive positions in many other program areas. Many industry scientists and engineers have stock and stock options in the companies they come from, and the companies, in turn, are probably competing for federal contracts. In these cases, which are few in number but important, divestiture of assets is common because it automatically eliminates the possibility of a conflict of interest. In some cases, appointees are required not only to divest assets in a former employer before taking a federal position, but also to recuse themselves from all involvement with that company while holding the position. Normally, recusal after full divestiture should not be necessary (unless the appointee retains pension or similar rights with the former employer). In many cases, recusal alone should be a sufficient remedy. We believe that the public interest is better served if the least drastic—and least costly—remedy is used in each case, because it would improve recruitment of needed personnel. Recommendation A-3. In applying the conflict-of-interest laws, divestiture of assets should not be considered the primary remedy and therefore required routinely. Recusal, coupled with full public financial disclosure, should be considered the primary remedy in most cases by the Senate, Office of Government Ethics, and designated agency ethics officials. The panel believes that more reasonable resolutions of substantive conflicts of interest would avoid unnecessary discouragement of prospective appointees. Divestiture has been used

OCR for page 31
Science and Technology Leadership in American Government: Ensuring the Best Presidential Appointments more often to cure conflicts of interest since legislation allowing ''roll-over'' of the proceeds from divested assets into a neutral investment vehicle was passed in 1989. Asset rollover does not help in all cases, however. Some assets have no present value that can be realized (e.g., stock options), and others cannot be divested all at once without major harm (e.g., a family-owned firm). If divestiture is necessary, it should not be coupled with recusal unless the appointee retains some interest, such as pension rights. Federal officials should not allow conflicts of interest arising from financial or other personal interests in matters relating to their official duties or activities of their agencies to influence their conduct in the public service. Federal officials are expected to serve the public interest, and they should not abuse their positions to enrich themselves, their families, or any organization in which they have a financial or personal interest (NAPA, 1988:26–34). The basic conflict-of-interest law is in 18 U.S.C. §208. It says that no "officer or employee" of the government may participate "personally and substantially" in a "particular matter in which, to his knowledge, he, his spouse, minor child, partner, organization in which he is serving as officer, director, trustee, partner or employee, or any person or organization with whom he is negotiating or has any arrangement concerning prospective employment, has a financial interest...." Some departments and agencies have conflict-of-interest restrictions in their organic statutes. The Department of Energy Act, for example, bars "supervisory" employees from holding any financial interests in an "energy concern" and also requires them to recuse themselves from participating in any matters affecting a former employer for a year (42 U.S.C. §7212 and §7216). Procedurally, potential conflicts of interest are handled in two steps. First, the nominee files a public financial disclosure statement that lists all relevant financial holdings and associations. Second, there is consultation between the nominee, the designated agency ethics official, and perhaps the Office of Government Ethics (OGE) and Office of the White House Counsel about potential conflicts of interest and how they may be resolved. The options include: A written recusal statement; Waivers in cases where the financial interest is considered "not so substantial as to be deemed likely to affect the services which the

OCR for page 31
Science and Technology Leadership in American Government: Ensuring the Best Presidential Appointments government may expect from an officer or employee"; Qualified blind and diversified blind trusts; and Divestiture of assets. Since the 1978 Ethics in Government Act, OGE attorneys and the designated agency ethics officials have tried to help nominees comply with the conflict-of-interest laws so they can accept presidential appointments. Divestiture has usually been used as a last resort in curing conflicts of interest, because it often incurred large capital gains taxes. On recommendation of the President's Commission on Federal Ethics Law Reform, the law was changed in the Ethics Reform Act of 1989 to eliminate this major disincentive to the acceptance of high-level positions (President's Commission, 1989:25). Capital gains caused by divestiture required to resolve conflicts of interest may now be rolled over into a neutral investment vehicle, such as a diversified mutual fund, and not be taxed until later. As a result of the new rollover provision, divestiture has become somewhat more common. OGE has approved rollovers in 196 cases since the law took effect in early 1990, of which 30–40 percent are estimated to affect PAS positions (Ley, 1992). Such cases have a special impact on scientists and engineers coming from industry, who are likely to have stocks and stock options as part of their compensation packages. Care should be taken to see that divestiture does not become an unnecessary deterrent to public service by this group when less drastic alternatives such as recusal are available. Nonprofit Job Tenure Leaves of absence have proved to be an effective way to recruit top scientists and engineers from academia, tax-exempt medical and research institutions, and the national laboratories for important presidentially appointed positions, and we recommend below that these institutions grant them freely since they have an important stake in the quality of the government's S&T leadership. The current practice of making appointees sever all ties with industrial employers should not be inappropriately extended to candidates from the academic and nonprofit sectors. There may be occasional instances where resignation is necessary, but if requirements to resign tenured positions became common, the chilling

OCR for page 31
Science and Technology Leadership in American Government: Ensuring the Best Presidential Appointments effect on government's capacity to recruit from the nonprofit sector, including colleges and universities, national laboratories, and research institutions, would be large and very damaging. Recommendation A-4. College and university faculty, and scientists and engineers from nonprofit medical institutions, national laboratories, and other nonprofit research organizations, normally should not be forced to give up tenure in their home institutions. In fact, leaves of absence for tenured faculty, and other nonprofit personnel, should be encouraged to increase the government's capacity to recruit and retain well-qualified scientific and engineering personnel in high-level positions. Resignation is only called for in those few instances where major decisions affecting the home institution are pending and are too central to the job for recusal to be practical. In those rare cases where resignation may be justified, there should be no implicit arrangements for the appointee to return. REDUCING THE COSTS OF SERVING The panel believes that the costs of entering the government service and staying there for an effective period of time, say, four years, should be reasonable. This does not mean that appointees should make as much as they would if they stayed in the private sector, but they should be able to pay their living costs. This principle is more important for midcareer scientists and engineers than for other professionals, because they are not as likely to have accumulated much wealth and their government service will probably not boost their salaries as much after they leave government. Compensation Until recently, low pay was a major disincentive to serve, even in presidentially appointed executive-level positions. It was not only uncompetitive with pay for comparable positions in the private and non-profit sectors, but it was also not enough to live on in the high-cost Washington, D.C., area. Although the executive pay situation has eased in the short term, it will not be adequate in some cases and will deteriorate again unless there are regular cost-of-living adjustments.

OCR for page 31
Science and Technology Leadership in American Government: Ensuring the Best Presidential Appointments Recommendation A-5. Executive salaries should be at levels that enable appointees and their families to live on their government pay in the high-cost Washington, D.C., area without having to borrow money or dip unduly into savings and assets. Now that executive-level salaries have been increased substantially, Congress and the President should ensure that there are regular salary reviews and pay increases, when justified by cost-of-living data, in order to avoid the large lapse in adequacy of executive pay that developed in the mid-1980s. The quadrennial commissions on executive, legislative, and judicial salaries have consistently noted that executive salaries are still lower in real terms than they were in 1969. The last quadrennial commission report presented data showing that, after adjustment for inflation, the 1988 salary for level II positions was about 65 percent of what it was in 1969 (which was a substantial improvement over 1982, when level II salaries were only 55 percent of what they were in 1969) (Commission on Executive, Legislative, and Judicial Salaries, 1988: Chart 2). Executive salaries have been raised significantly in recent years, however. For example, the top salary, executive level I, has increased from $99,500 in 1988 to $143,800 in 1992. The salary for executive level II positions has increased from $89,500 to $129,500 over the same period. Because of the cumulative pay increase of nearly 45 percent since 1988, level II salaries are now up to 80 percent of what they were in 1969, after adjustment for inflation (see Figure 2-1).1 Pay for executive level IV, the level of most S&T-related PAS positions, has also increased 45 percent since 1988, from $77,500 to $112,100. Officials in the Office of Presidential Personnel and the Assistant to the President for Science and Technology told the panel that the increases have eased recruitment problems a great deal. While adequate pay is not sufficient by itself to motivate high-quality scientists and engineers to serve, lack of it has often been a deterrent to serving. It is especially important, therefore, to ensure that salary levels are increased regularly to keep up with the cost of living. 1   If the level II salary in 1969 had increased with inflation, it would be more than $160,000 in 1992. It should be noted, however, that executive pay levels, which were established in 1965, were increased greatly in 1969. Using 1969 as the base year therefore makes the pay gap larger than using, say, 1968. If the current pay for executive level II is compared with 1968's in constant dollars, the gap is 10 percent rather than 20 percent.

OCR for page 31
Science and Technology Leadership in American Government: Ensuring the Best Presidential Appointments Figure 1-1. Purchasing Power of the Executive Level II Salary Since 1969 (adjusted for inflation). The actual salary for each year was calculated as a percentage of what the 1969 salary would have been if it had been adjusted regularly for inflation over the years, using the Consumer Price Index (CPI-U). In 1982, purchasing power reached a low point of 55 percent of what it was in 1969. Recent pay hikes have increased that figure to nearly 80 percent in 1992. In addition to the most comprehensive revisions in the government's ethics laws since the 1978 Ethics in Government Act, the 1989 Ethics Reform Act included the pay increases just described, prescribed a new method of determining and implementing automatic annual cost-of-living adjustments, and created a new quadrennial pay commission process to review the pay situation for top federal officials (McGrath, 1990). Previously, top federal officials were eligible to receive the same cost-of-living adjustment as General Schedule federal employees, based on surveys of comparability with the private sector. Beginning on January 1, 1992, congressmen and federal executives are eligible for cost-of-

OCR for page 31
Science and Technology Leadership in American Government: Ensuring the Best Presidential Appointments living adjustments tied to the annual change in the Employment Cost Index (ECI), a quarterly index of private wages and salaries published by the Bureau of Labor Statistics. The rate of adjustment is the same as the percentage of change in the ECI for the year ending a year before the adjustment, less one-half of one percent (Gressle, 1991). For example, the ECI for private wages and salaries between December 1989 and December 1990 was 4.0 percent. The cost-of-living adjustment effective January 1, 1992, therefore, was 3.5 percent. In most years in the 1980s, Congress denied annual comparability adjustments for itself and therefore for executive level officials. Although the new annual cost-of-living adjustment process established by the Ethics Reform Act does not require recorded votes, it remains to be seen whether Congress will allow full increases to go into effect without reducing or eliminating them, as they often have in the past. Pay increases for top federal officials and members of Congress will also be based on a new quadrennial pay-setting system. Congress revamped the quadrennial commission process because it was not working well; only three of the seven commissions since 1968 had their recommendations passed, and the amounts were less than recommended in each case. The new quadrennial commission, called the Citizens' Commission on Public Service and Compensation, will consist of 11 members, six chosen by the President, Congress and the judiciary, and five chosen by lot from registered voters in different regions of the country. The next commission will be appointed in fiscal year 1993 and will report its recommendations on December 15, 1993. The President will then consider them and make recommendations to Congress in January 1994. The pay recommendations can take effect only if both Houses of Congress pass a resolution of approval on a recorded vote and after an intervening congressional election takes place, that is, no earlier than January 1995. Whether the new quadrennial system will make it politically easier for Congress to pass pay increases for itself remains to be seen. The National Commission on the Public Service (Volcker Commission) recommended development of a process that would trigger salary increases in a more timely fashion. They suggested that, if Congress' inability to act on its own salaries remained an obstacle, the President should make separate pay recommendations for top executive officials and Congress should act separately on them (National Commission on the Public Service, 1989a).

OCR for page 31
Science and Technology Leadership in American Government: Ensuring the Best Presidential Appointments Outside Income Exceptions The law allows outside earned income, from appropriate sources, totaling no more than 15 percent of an appointee's government salary. A 1989 Executive Order, however, bans all outside earned income. This new regulation can have the unfortunate effect of cutting appointees off from continuing professional activities that are part of their scientific or engineering careers. Recommendation A-6. The Executive Order prohibiting outside earned income for presidential appointees should be revised to permit appointees to continue activities that are normally part of a professional research career, such as textbook editorships. Such exceptions should be carefully considered and approved by the department or agency head if the time demands will not interfere with the appointee's official duties, which are primary. Using New Pay Flexibilities Recommendation A-7. The pay-related flexibilities authorized by the Federal Employees Pay Comparability Act of 1990 (FEPCA) could and should be used where necessary to recruit and keep top candidates for presidentially appointed positions. These include recruitment bonuses and retention allowances, special pay categories, and reimbursement for moving expenses. FEPCA's pay-related flexibilities apply to presidential appointees and should be used to advantage by recruiters. Recruitment bonuses of up to 25 percent of base pay (but only up to a total pay cap of $143,800 in 1992) could be used to offset some of the costs of moving to Washington; retention allowances of up to 25 percent of base pay (also capped at $143,800) could be used to offset the costs of living in Washington for especially hard-to-retain scientists, engineers, and health professionals. Authority to designate certain positions as "critical" and pay them up to executive level I ($143,800) can also be used, as was done in the case of the new NIH director. These authorities should not be used generally but selectively, to enable the administration to recruit for certain key positions.

OCR for page 31
Science and Technology Leadership in American Government: Ensuring the Best Presidential Appointments ADMINISTRATIVE STREAMLINING The appointment process itself has become too elaborate and long, which unnecessarily deters some potential candidates and thus slows an administration in filling the top leadership positions in the government. The next two recommendations call for ways to reduce the sheer length and paperwork burden of the appointment process itself. Standardize Forms and Coordinate Procedures Recommendation A-8. Categories and time periods used in financial disclosure and other nomination forms used by executive and legislative branches should be simplified and made compatible (a) with each other and (b) with the categories and time periods used for taxation purposes, to reduce cost and delay in the appointment process. Also, higher minimum thresholds for reporting financial interests would eliminate some of the paperwork without unduly threatening the integrity of government. At the present time, candidates for PAS positions fill out a series of separate, complicated, and incompatible financial disclosure and personal data forms, for the Office of Personnel Management, OGE, the FBI, and the White House, and for the relevant Senate committee. This slows the process, imposes unnecessary legal and accounting costs on candidates, and multiplies the chance of error. All the parties in the process should agree to use a common core data set, if not a common form, to which each could add any questions of particular interest.2 It would be most useful to adopt the accounting time periods and categories already prescribed by the Internal Revenue Service. Update Previous FBI Background Investigations Recommendation A-9. The security clearance by the FBI should only cover the time period since the last FBI background investiga- 2   The President's Commission on the Federal Appointment Process recommended that the Senate adopt one basic form for all committees and accept the SF-278—the executive branch's financial disclosure form—as an alternative net worth statement (1990:5).

OCR for page 31
Science and Technology Leadership in American Government: Ensuring the Best Presidential Appointments tion, if one was ever conducted, to reduce this significant source of delay in the nomination process. Background investigations by the FBI add weeks and even months to the appointment process. Some of this time could be saved if the FBI only had to investigate the time period since a previous investigation. This would be especially helpful in recruiting scientists and engineers because some of those nominated for important PAS positions have already been investigated by the FBI before appointment to such science advisory boards as the President's Council of Advisors on Science and Technology and the National Science Board.3 3   The President's Commission on the Federal Appointments Process made a similar recommendation that the FBI only investigate the years since the last FBI background check that was based on a full field investigation, to "avoid time-consuming reinvestigations of old information" (President's Commission, 1990:9).