BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

OF THE

COMMITTEE ON EDUCATION AND

THE WORKFORCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

HEARING HELD IN WASHINGTON, DC, JUNE 27, 2000

Printed for the use of the Committee on Education

and the Workforce

STATEMENT OF BERNARD E. ANDERSON, ASSISTANT SECRETARY, U.S. DEPARTMENTOF LABOR, EMPLOYMENT STANDARDS ADMINISTRATION, WASHINGTON, D.C. *

STATEMENT OF JOHN KOCH, DIRECTOR, OFFICE OF LABOR MANAGEMENT STANDARDS, U.S. DEPARTMENT OF LABOR, WASHINGTON, D.C. *

STATEMENT OF SHIRLEY J. WILCHER, ASSISTANT SECRETARY, OFFICE OF FEDERAL CONTRACT COMPLIANCE PROGRAMS, U.S. DEPARTMENT OF LABOR, WASHINGTON, D.C. *

STATEMENT OF T. MICHAEL KERR, ADMINISTRATOR, WAGE AND HOUR DIVISION, U.S. DEPARTMENT OF LABOR, WASHINGTON, D.C. *

STATEMENT OF SHELBY HALLMARK, ACTING DIRECTOR, OFFICE OF FEDERAL WORKERS' COMPENSATION PROGRAMS, U.S. DEPARTMENT OF LABOR, WASHINGTON, D.C. *

APPENDIX A - WRITTEN STATEMENT OF CHAIRMAN PETE HOEKSTRA, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE *

APPENDIX B - WRITTEN STATEMENT OF RANKING MEMBER TIM ROEMER, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE *

APPENDIX C - WRITTEN STATEMENT OF BERNARD E. ANDERSON, ASSISTANT SECRETARY, U.S. DEPARTMENT OF LABOR, EMPLOYMENT STANDARDS ADMINISTRATION, WASHINGTON, D.C. *

APPENDIX D - SUBMITTED FOR THE RECORD, RESPONSE LETTER TO CHAIRMEN PETE HOEKSTRA, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS AND JOHN A. BOEHNER, SUBCOMMITTEE ON EMPLOYER-EMPLOYEE RELATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE, FROM SHIRLEY J. WILCHER, DEPUTY ASSISTANT SECRETARY, U.S. DEPARTMENT OF LABOR, EMPLOYMENT STANDARDS ADMINISTRATION, WASHINGTON, D.C., JUNE 23, 2000 *

APPENDIX E – SUBMITTED FOR THE RECORD, LETTER TO BERNARD ANDERSON, ASSISTANT SECRETARY, U.S. DEPARTMENT OF LABOR, EMPLOYMENT STANDARDS ADMINISTRATION, WASHINGTON, D.C., FROM CHAIRMAN PETE HOEKSTRA, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE, JULY 6, 2000 *

APPENDIX F – SUBMITTED FOR THE RECORD, RESPONSE LETTER TO CHAIRMAN PETE HOEKSTRA, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE, FROM BERNARD E. ANDERSON, ASSISTANT SECRETARY, U.S. DEPARTMENT OF LABOR, EMPLOYMENT STANDARDS ADMINISTRATION, WASHINGTON, D.C., AUGUST 28, 2000 *

APPENDIX G – SUBMITTED FOR THE RECORD, LETTER TO CHAIRMAN PETE HOEKSTRA, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE, FROM GARY ENGEBRETSON, PRESIDENT, CONTRACT SERVICES ASSOCIATION OF AMERICA, WASHINGTON, D.C., JUNE 27, 2000 *

Table of Indexes *

The Subcommittee met, pursuant to notice at 2:50 p.m., in Room 2175, Rayburn House Office Building, Hon. Peter Hoekstra, Chairman of the Committee, presiding.

Present: Representatives Hoekstra, Hilleary, Schaffer, and Roemer.

Staff Present: Steve Settle, Professional Staff Member; Faith Cristol, Professional Staff Member; David Frank, Professional Staff Member; Rob Green, Workforce Policy Coordinator; Peter Gunas, Workforce Policy Counsel; Patrick Lynden, Professional Staff Member; Michael Reynard, Deputy Press Secretary; Molly Salmi, Professional Staff Member; Deborah Samantar, Office Manager.

Chairman Hoekstra. A quorum being present, the Subcommittee on Oversight and Investigations of the Committee on Education and the Workforce will come to order.

Good afternoon. We just talked with the panel about the format for the next hour. It looks like it will be about 50 minutes to an hour before we will have a vote on the Floor and then after that, that room has been requested as a prep room for the President. He is going to be here later this afternoon for a reception and we need to clear that room at around 4:00. So one way or another we're going to be done at 4:00. Whether it is a vote on the Floor, or whether it is the Secret Service encouraging us to kindly move on, whatever or however that process works, we will be leaving at around 4:00. Of course I hope you understand the reason we had the delay in the beginning was that at 2:00 they called three votes. So that is where we are.

Under Rule 12(b) of our Committee Rules, any oral opening statements at this hearing are limited to the Chairman and Ranking Minority Member. This allows us to focus on discussions with our witnesses sooner and helps Members keep to their schedules.

Without objection all Members' statements will be inserted into the hearing record. Without objection, so ordered. Also, I ask that all documents referenced in the hearing be incorporated into the hearing record without objection.

I also ask unanimous consent that the record of this hearing be held open over the next 15 days for the submission of additional statements, information, or testimony relevant to this hearing without objection.

We were going to try to also have something different but I do not think we will get to that. We have questions that were submitted by the public that Mr. Roemer and I have both reviewed and agreed on, and that we were going to ask of the panel. I would guess that unless the panel was very, very quick and the Members were even shorter, we will probably submit those questions to the panel for a written response over the next two weeks. I will submit my entire statement for the record.

What we really wanted to do was to start a dialogue between the Executive Branch, Congress and the American people. We wanted to work from the Results Act and take a look at the strategic plans and the performance measures of the types of things that the Labor Department had prepared. We have scheduled a series of hearings that deal with this issue. This is the first in that process.

Again, the Results Act required agency leaders to develop multi-year strategic plans, annual performance plans with goals and objectives, and annual performance reports and results. That is the format of the Results Act. And rather than going into depth for each one of those sections, I will submit my statement for the record and I will turn it over to Mr. Roemer.

WRITTEN STATEMENT OF CHAIRMAN PETE HOEKSTRA, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE – SEE APPENDIX A

Mr. Hoekstra. Mr. Roemer, we are on a little bit of time compression today. There is going to be another vote in about an hour and we need to clear the floor at 4:00 because the President is going to be here.

Mr. Roemer. All right. I will be extremely brief. I ask unanimous consent to revise and extend.

Chairman Hoekstra. Without objection.

Mr. Roemer. Thank you, sir.

South Bend, Indiana, is my hometown and the University of Notre Dame is one of our largest employers. There’s a famous saying by Newt Rockney to one of his players passed along by George Gibb, which was, "Win one for the Gipper."

It is a bad joke to say, let's try to make sure that GPRA reflects good common sense, quality service and customer satisfaction, and that it looks at good government. I have a statement that reflects many of these very important goals that we are trying to reach and achieve, and I look forward to the panel's testimony.

I yield back to balance of my time.

WRITTEN STATEMENT OF RANKING MEMBER TIM ROEMER, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE – SEE APPENDIX B

Chairman Hoekstra. I thank the gentleman for yielding.

We have outlined on the screen the structure of the Employment Standards Administration, also known as ESA. It has four main operational subdivisions, the Wage and Hour Division, the Office of Federal Contract Compliance Programs, the Office of Labor Management Standards, and the Office of Federal Workers' Compensation Programs.

Our first witness today will be Dr. Bernard Anderson who has served as Assistant Secretary for ESA since June 1993. Prior to this appointment, he was President of the Anderson Group in Philadelphia. He has been named tenured professor at the University of Pennsylvania, Wharton School of Finance and Commerce, and authored several books, articles on economics and employment policy.

Welcome Dr. Anderson.

Mr. Anderson. Thank you Mr. Chairman. Let me say that it is the usual practice of witnesses before Congressional Committees to offer the encomiums of pleasure for the opportunity to be invited. But I can say to you that it is a genuine pleasure for us to be here today to discuss the Government Performance and Results Act.

I am accompanied by my colleagues who are the executive heads of the programs within ESA. I cannot see the board, but they are the four programs that you identified. To my immediate right in geographic location rather than ideology is Mr. John Koch the Director of our Office of Labor Management Standards. Next to him is Ms. Shirley Wilcher, Deputy Assistant Secretary for the Office of Federal Contract Compliance Programs. To my left are Mr. T. Michael Kerr, the Wage and Hour Division Administrator, and at the end Mr. Shelby Hallmark who is the Acting Director of the Office of Federal Workers' Compensation Programs.

As you indicated, Mr. Chairman, the ESA is the largest agency within the Department of Labor with over 4,000 employees and it pursues a mission to enhance the welfare, and to protect the rights of American workers. It is inspired by the vision to achieve universally applied practices in the American workplace. Our work is accomplished from the national office here in Washington and 170 field offices throughout the country to ensure that enforcement and benefit delivery programs are accessible to the American public.

I should tell you that in the Department of Labor we take GPRA very seriously and as noted in the Government Accounting Office report our objective of measurable performance goals provides a clear picture of performance results across the agency.

I have in my pocket a copy of the crib card that we all carry which has the three goals of the Department of Labor. They are: a prepared workforce, a secure workforce, and quality workplaces. Within the ESA our programs support the second and third; that is a secure workforce and quality workplaces. Eight of the ESA performance goals appear in the Department's strategic and performance plans and in the Department's fiscal year 1999 annual performance report which was presented to this Committee in advance of this hearing.

The goals set the standard for measuring the performance and effectiveness of our programs as we pursue our mission. And to stay abreast of our progress we have quarterly reviews on the status of each program's performance. Also to emphasize the importance of achieving ESA's strategic goals, the performance appraisal of all senior managers includes elements for rating the manager's contribution to the achievement of the Agency and Department goals. What that means is that whatever bonus awards are presented at the end of the year, they reflect that senior manager's contribution to the achievement of the GPRA goals.

ESA program Directors specify performance expectations for the regional Directors who manage our program operations in the field so that at every level ESA demonstrates the importance of GPRA as a management tool that is useful for helping the agency accomplish its goals. In fiscal year 1999, we exceeded or fully achieved six of the eight departmental goals.

I will now very briefly present some of the key achievements and highlights of the ESA program performance in 1999 beginning with the Wage and Hour Division, given our time.

The Wage and Hour Division has two broad and complementary objectives. One, to achieve compliance with the worker protection laws for which we have responsibility; and, second, to improve customer satisfaction with the services we provide.

Our compliance program balances public education and outreach with enforcement efforts including using a variety of remedial tools. The program focuses on increasing compliance in the low-wage industries where violations of the labor laws are most severe.

Wage and Hour has three goals that appear in the Department's annual performance plan:

First, to increase compliance with labor standard laws by 5 percent in the San Francisco and New York City garment industries; to establish compliance baselines for the agricultural commodities in onions, lettuce, cucumbers; we call that the "salad bowl"; and to establish a baseline for assisted living facilities in residential health care.

Second, to increase compliance among employers that were previous violators and to establish recidivism baselines in the San Francisco and New York garment industries, and also in the salad bowl, and in residential health care.

Third, to implement a new Davis-Bacon wage survey data collection form and an automated printing and mailing process and test whether the automation and technological change of the prevailing wage survey process can improve the accuracy and timeliness of wage determination.

Mr. Chairman, I appreciate and share your personal interest in the often terrible working conditions in the garment industry sweatshops, particularly in New York City, and I know that you visited those sweatshops.

In both New York in San Francisco we were disappointed that the level of compliance in the garment industry was essentially unchanged in fiscal year 1999 compared to what we observed in 1997. That result led Wage and Hour to reassess its strategy for increasing industry compliance. We have broadened our outreach to community-based organizations and worker organizations to build trust and improve communications. We are taking action to strengthen litigation and criminal prosecutions of the violators in New York. We are opening a new office in Brooklyn to increase investigations in the Sunset Park area, which is an area of expanding activity for garment manufacturing.

Currently pending is a nationwide investigation of a major retail chain, which we hope will spark increased compliance among contractors who make the clothes the retailer sells. Our objective in cases like this is to get retailers to accept greater accountability for labor law compliance and their garment suppliers.

Excuse me, let me skip ahead to the OWCP or OFCCP. OFCCP administers and enforces federal laws and regulations that prohibit government contractors from discriminating in employment and require that they undertake affirmative action to ensure equal employment opportunity. OFCCP's goal was to increase by 5 percent over the 1998 base the number of federal contractors brought into compliance with the Equal Employment Opportunity requirements. The OFCCP met 93 percent of the goal by bringing 2,648 federal contractors into compliance.

I will skip ahead to the Office of Workers' Compensation Programs. OWCP which is the second largest program in ESA mitigates the financial burden on eligible workers, their dependents or survivors resulting from work-related injuries, disease, or death through the provision of wage replacement, cash benefits, medical treatment, vocational rehabilitation, and other benefits.

In fiscal 1999, OWCP's three performance goals were:

First to return federal employees to work following an injury as early as was appropriate as measured by a 6 percent reduction from the baseline in production days lost due to disability for cases in the quality case management program.

Second, to produce $19 million in first-year savings through periodic role management, which is a program for long-term beneficiaries.

Third to save 19 percent annually in the cost of FICA medical services.

The GPRA has been very productive in OWCP and is fully integrated into the management decision-making process. OWCP's performance results have been positive. In fiscal 1999 average lost days for QCM cases were sharply lower, far exceeding the fiscal 1999 goal. Also the OWCP completed action on nearly 7,000 PRM long-term cases and saved nearly $21 million in compensation costs. Since fiscal year 1994, when the PRM program was introduced, that program has saved the federal government $414 million in compensation costs.

Finally, to reach the third goal, OWCP adopted a fee schedule for pharmacy bills in January 1999, implementing the new cost controls, which saved nearly $17 million in medical service bills last year. When combined with the $106 million saved by using a fee schedule for physician services, total medical billings were reduced by 22 percent last year.

Finally, our Office of Labor Management Standards which administers the Labor Management Reporting and Disclosure Act and is ESA's smallest program has three objectives for LMRDA: to resolve member complaints concerning union officer elections, trusteeships, and other matters pertaining to safeguards for union democracy; to protect union financial integrity by enforcing safeguards established under the law; and, third, to ensure that LMRDA reports required of unions are available for public disclosure.

In fiscal year 1999, the OLMS Departmental goal was to have 85 percent of the unions with annual receipts of $200,000 or more, file their financial reports on time, which means, no more than 90 days after the end of the union's fiscal year.

The timely filing rate of these unions in fiscal 1999 was 89 percent, which significantly exceeded both the goal in 1999 and the 87 percent goal for 1998 and 1997. So each year, OLMS has exceeded its goal in the timely filing of union reports.

This year in fiscal year 2000 we are going to look at that goal to determine whether it should be raised or whether it should be deleted because we need a more accurate measure of the degree to which OLMS is adequately performing the function of protecting union democracy.

I will stop there, Mr. Chairman, and turn to my colleagues for very brief statements in which they can provide some highlights of the performance that they reported in 1999 beginning with Mr. Koch.

WRITTEN STATEMENT OF BERNARD E. ANDERSON, ASSISTANT SECRETARY, U.S. DEPARTMENT OF LABOR, EMPLOYMENT STANDARDS ADMINISTRATION, WASHINGTON, D.C. – SEE APPENDIX C

Mr. Koch. Thank you. Mr. Chairman, Members of the Committee, I would like to just make some brief comments about the reporting aspect of our mission.

As you know the reporting disclosure function is key to our mission of ensuring union democracy and fiscal integrity. In the last few years we have undertaken and focused on a number of improvement areas in reporting using GPRA goals and measurements. I think, also, as the Committee is aware, the Congress has allocated significant funds for OMS to modernize our whole reporting area particularly in regard to electronic reporting capabilities and disclosure of reports and information on the Internet.

I am glad to report that we are on schedule with our plans to modernize the reporting function. We expect it to be operational early next calendar year. In conjunction with the project of electronic filing, we have focused primarily on to this date two side aspects of it. One is delinquent reporting, making sure unions are filing reports on time so we are able to make them available for public disclosure to members and others. We have had some degree of success in improving our filing time limits particularly with the larger unions. Secondly, the area we are now focusing a lot of attention on is the quality of the report itself; is it complete? Is it accurate? Is it completed in accordance with the instructions on the forms?

We now have in place a desk audit procedure for reviewing reports using a computer. This is now enabling us to start looking at reports and where necessary going back to the unions and requiring amended reports, or in some cases perhaps opening audits on site at the union to answer questions that the reports may raise.

Next year as part of the electronic filing project, we should have the capability to do a lot of this review work electronically and probably have the capability to provide feedback to the unions and use the information for our own purposes for virtually all of the reports that are filed with us. We are aiming to increase the timeliness of the reports so they are available and also the quality of the reports. All of these reporting functions are tied together and, of course, supplement our other missions of fiscal integrity and union democracy.

Thank you.

Ms. Wilcher. Mr. Chairman, Members of the Committee, my name is Shirley J. Wilcher. I want to thank you for the opportunity to speak before the Subcommittee regarding the Office of Federal Contract Compliance Programs, the fiscal year 1999 submission under the Government Performance and Results Act.

The OFCCP as do the other components of the ESA fully supports the spirit and the letter of GPRA. When I served as Associate Counsel for this Committee in the 1980s my colleagues and I often remarked that OFCCP's reports of mission-related activities such as the number of compliance reviews and complaint investigations completed in a year were insufficient to fully measure or evaluate efficiency and effectiveness.

Therefore, when I became Deputy Assistant Secretary for Federal Contract Compliance in 1994, we began to develop a strategic planning process that addresses more than outputs and includes a clear mission, a strategic vision, and a goal. Our primary goal was and is to increase by 5 percent a year the number of federal contractors brought into compliance.

GPRA also served as a catalyst for the establishment of OFCCP's three-pronged, fair enforcement strategy, which includes regulatory reform, data collection, and a tiered review process. A regulatory reform agenda included changes to 41 CFR, Part 60-1, promulgated in 1997, to establish multiple ways of conducting compliance reviews based upon the receipt of better information. The information collection piece or the second prong of the strategy is embodied in our equal opportunity survey. And the third prong of the strategy, regulatory reform, also includes the 60-2 proposal which is intended to substantially reduce the paperwork currently required for affirmative action programs and to focus on the essential components of the contractor's equal opportunity program.

OFCCP's goal is part of the Secretary and ESA's goal to foster quality workplaces free of discrimination. This goal was distributed to every member of the OFCCP staff. We made sure of that. It forms the basis of our compliance activities for our ultimate goal and for our mission to promote equal employment opportunity for all employees working for federal contractors. Thank you.

Mr. Kerr. Mr. Chairman, Members of the Committee, I would like to use my minute to just briefly introduce you to our use of investigation-based compliance surveys in Wage and Hour. GPRA has provided some of the impetus for Wage and Hour to develop this entirely new mission-based measure of program performance. Wage and Hour now conducts investigation-based compliance surveys in selected low-wage industries nationally, regionally, and at the district office level, to measure the levels of compliance with the worker protection laws for which we have responsibility.

Many law enforcement agencies either have mandated existing data collection programs or BLS, Bureau of Labor Statistics, survey programs that provide some objective performance measures reflecting changes in outcomes such as workplace injury, illness, and fatality rates. Wage and Hour does not.

The surveys that we've developed both constitute a form of intervention that changes behavior to achieve compliance and provides Wage and Hour, the industry, the public, and the Congress with accurate measures of compliance level from which strategies for changing industry behavior can be designed and then their effectiveness assessed over the long term.

Initially, a randomly selected representative number of establishments within an industry are targeted for investigation. From these investigations a baseline level of compliance is established. Subsequent compliance surveys usually over, we hope, a two- or three-year cycle determine how effective intervening strategies that we might come up with or that we might come up with in conjunction with the industry or with other stakeholders have been in changing behavior to achieve compliance in those targeted industries.

Mr. Hallmark. Mr. Chairman and Members of the Committee, I would be glad to talk about GPRA for a long, long time. It is a subject I'm very excited about as I think are all

my colleagues at the table here. But if I can just say a couple of words about how GPRA is playing out in OWCP, I think it may be more helpful for the hearing today.

We have long been involved with OWCP in measuring and holding ourselves accountable, but in the old days that focus was on internal processes and on timeliness of moving cases. GPRA has led us to look at customer focus measures and looking outside of our borders and finding out what is happening in the real lives of our recipients.

That has led us to re-envision our program and to try to see beyond a gatekeeper- adjudicator type program to a service-delivery proactive program that reaches out to its customers. That is a transformation we are working on. I will not say that we have gotten there all the way, but it is something that GPRA has led us to articulate in a much clearer way.

An example of how that has worked out, I think, is best seen in looking at our goal with respect to return to work. We decided back in 1995 that return to work should be the goal number one in the FICA program; and I can go on for a long time about the reasons for that. But we have set ourselves diligently to figuring out the ways to measure that particular goal that are most clear and effective. We started with the goal of resolving new serious injuries within one year, 75 percent of the time.

We soon found we could do better than that by counting average lost days for each one of those cases. Just by setting up the average lost day measure, we started to learn things that we did not know despite the fact that we dealt with these cases for 75 or 80 years. We found out, for example, that the failure of the employing agencies to give us timely notice of injury started claims off on a bad foot and resulted oftentimes in making return-to-work efforts very, very difficult. So we found that extraneous and seemingly minor kinds of problems out there in the entire environment impacted on what we were trying to do.

Our response to that was to set up a new goal for ourselves, the GPRA measure, to try to get agencies to submit those forms to us in a timely manner. We have had quite a bit of success in that regard and it has helped us to reach the kind of successes that Dr. Anderson has mentioned earlier.

We are moving beyond the goal that we have now. The goal that we talked about on lost days addresses only the 7 percent most serious cases. Under the President's Federal Worker 2000 Safety Initiative, we are now measuring lost days for every single injury that occurs in the federal establishment. That requires a lot more data; we have had to change our systems. We have a database in place now, which will allow us to measure that performance and to provide each of the federal agencies feedback about how well they are dong. We think it is a wonderful program and we are going to keep working on it.

Mr. Anderson. Mr. Chairman, that concludes our opening statements. I would like to request that the full copy of my statement, which was submitted to the Committee, be accepted as part of the record of this hearing. We would be happy to answer any questions that you, or other Members of the Committee might have at this time.

Chairman Hoekstra. Without objection, so ordered.

Mr. Anderson. Thank you.

Chairman Hoekstra. The Agency has responsibility for a whole series of different Acts and rules and laws that we have asked you to implement. And then when you compare that to the performance report or the goals and the objectives that you have outlined, how do you meld those together? Are there areas that do not fall into GPRA, or are there gaps that you don't have performance measurements for?

Mr. Anderson. GPRA is a process, Mr. Chairman, for managing by objectives. And what that means is that in every area of our responsibility we can identify specific outcome goals toward which our activities will be directed. We then can marshal our resources to develop strategies to assist us in reaching those goals.

We can identify and define quantitative measures to determine how well we are doing in reaching that goal. And after we apply those measures to our performance on an annual basis, can make midterm corrections in the strategies to determine which strategies are likely to be most effective in helping us get to the goal.

Now, the strategic plan is a five-year strategic plan. The performance measures, on the other hand, are annual performance measures, which allow us to gauge how well we are doing year by year in reaching the goal. All of what we do can be subsumed within two of the three strategic goals for the Department as defined by the Secretary, and that is, a secure workforce and quality work places. Everything we do can be subsumed within that category.

But, now, I should also say that the eight performance goals that are contained in the annual performance report that was submitted to the Committee are eight of 22 goals in ESA. Which is to say that we have 14 goals, which cover areas of our responsibility, some of which are not included in the departmental plan for GPRA accomplishment. And all of those 22 goals capture the great bulk of all of the enforcement activity for which this agency and its four constituent parts have responsibility.

Chairman Hoekstra. So family medical leave would fall under one of the other 14 specific goals and objectives to see how the Family Medical Leave Act is working? I am just trying to understand the process.

Mr. Anderson. No, we do not have a specific goal for family medical leave. But we do have goals for customer satisfaction with the services we provide.

For example, you might recall that I think it was Michael Kerr who indicated that there are two overall goals within the agency. One is to increase compliance with the law; the other is to increase customer satisfaction with the services we provide. Clearly increasing satisfaction with the services we provide would include increasing satisfaction without implementation of the Family Medical Leave Act. We conduct surveys to determine what the degree of customer satisfaction is with the services that we provide.

Chairman Hoekstra. In family medical leave I would think that that would fall under the Department's third goal, which would be quality workplace.

Mr. Anderson. I think that it would be more appropriately placed within a secure workforce. And let me tell you why. Because family and medical leave is a benefit to workers that allows them to harmonize their work life and their family life. If they can do that, then they will be more secure, they will be happier, they will be more content, and they will be more productive. So I would say that family and medical leave, to the extent that we implement it at a satisfactory level would be in pursuit of a more secure workforce.

Chairman Hoekstra. I am not going to argue with that one, although being more of a feeling person, I would put it under "quality"; but, hey, whatever.

[Laughter.]

Where would the measurement be in GPRA for feedback to Congress on whether a law that we passed was helping achieve the quality or the security objectives of the Department?

Mr. Kerr.

Mr. Kerr. About 30 percent of what we do is directed investigations, the ones that I described to you in my brief statement. Seventy percent of our work is complaint-based. A good amount or most of our work in the Family and Medical Leave Act and in support of the Family and Medical Leave Act comes from complaints. With regard to the performance goals for the Wage and Hour Division we have specific goals for complaint resolution. In the performance goals for customer satisfaction, as Dr. Anderson pointed out, we also do surveys of the complainants to see how the Family and Medical Leave Act complaints break out with other laws that we administer.

So in the 70 percent of the world of work within Wage and Hour that is driven by complaints from citizens, there is a significant amount of work under the Family and Medical Leave Act and that is where we look at how well we are doing in the Family and Medical Leave Act.

The first part of your question which was you have a number of laws in the Employment Standards Administration and a goodly number of them are in Wage and Hour, do you have performance goals for all of those? On the directed side, when we go after low-wage industries, and we are looking for what you might first assume mainly to be Fair Labor Standards Act overtime and minimum wage violations, in those acts, in those investigations, because my investigators look for violations under all laws - migrant and seasonal protection for agriculture gets looked at, child labor gets looked at, the various parts of the Fair Labor Standards Act get looked at. So, while you may not see a Migrant and Seasonal Agricultural Workers' Protection Act goal, we are fairly concentrated, because of the directed investigation workload in agriculture. We are looking for violations of that law where part of our compliance measure is, as well as the Fair Labor Standards Act.

Chairman Hoekstra. Thanks. Mr. Roemer.

Mr. Roemer. Thank you, Mr. Chairman. Dr. Anderson, I think at times in Congress we are entirely too partisan and we do not have enough good things to say to one another. So I want to get you on the record with some insider information.

Chairman Hoekstra. Are you going to ask him to say some nice stuff about us?

Mr. Roemer. I am going to try. I might exhaust my whole five minutes, Peter, but I am going to try. I understand that you taught a Member of our Committee, is that correct?

Mr. Anderson. Yes, Mr. Ford was a student of mine at the University of Pennsylvania.

Mr. Roemer. Mr. Ford was a student of yours at the University of Pennsylvania. I understand he did rather well in your class.

Mr. Anderson. He was an excellent student and he got an A in the course.

[Laughter.]

Mr. Roemer. I will be very proud to pass on around here that Harold is known as an intellectual.

Mr. Anderson. It is because of me let me say.

[Laughter.]

Mr. Roemer. Well, we sure have not seen that talent. He needs some more tutoring from you now after his time in Congress. He misses you.

[Laughter.]

No, in all seriousness, he is a very, very valuable member of this Committee and of the new Democrat coalition that we formed up here too.

Dr. Anderson, let me ask you a very blunt, straightforward question. Has GPRA made you more efficient at being able to satisfy the customer but doing more paperwork as managers?

Mr. Anderson. Because I think, Mr. Roemer, it forces the Agency to focus on outcome rather than input. As Michael Kerr indicated, in the Wage and Hour area, for example, a number of investigations are conducted in response to complaints. We could conduct investigations in response to complaints until the cows come home and never know what impact our investigations are having other than the payment of back pay if violations of FLSA are identified.

GPRA changes the paradigm for the management of the program, because what you are doing is aimed at achieving a long-term objective. What is the objective of this statute? What is it intended to do? How will it improve the lives of workers who are covered by it? The objective is to see that workers who are entitled to be paid the minimum wage in overtime in fact receive those earnings. Which means that employers have to obey the law.

Mr. Roemer. That is a nice segue to my next question. How do you leverage your resources in time to ensure that your enforcement is targeted and is where minimum wage or overtime violations are the biggest problems?

Mr. Anderson. First of all, we focus our resources on low-wage industries. It is like Willie Sutton. You might recall, they asked Mr. Sutton, "Mr. Sutton, why do you rob banks?" He said, "Because that's where the money is." They ask us, "Why do you focus on low-wage industries?" "Because that's where the violations of the Fair Labor Standards Act are," in low-wage industries, which are characterized by high rates of violations. They have large numbers of workers who are very vulnerable.

There are three criteria that are used to identify an industry that will be targeted. One is the enforcement history of that industry. The second is the demographic characteristics or workers in those industries; low wage workers, many immigrant workers, others of that type. And, third, the changes in the level of employment in the industry whether employment is going rapidly, or whether employment is declining rapidly. So we look at those three and identify industries, which are targets of opportunity for increasing compliance.

Mr. Roemer. Let me ask you one final question. Who were the stakeholders that you worked with in developing GPRA, and is there another process in place by which others may participate with you?

Mr. Anderson. The stakeholders are businesses that are affected by these laws, interested organizations that have been advocates for the adoption of the law and have a continuing interest in how well the law is implemented. The Congress is a stakeholder. There are other groups and institutions that are stakeholders and we consult widely and frequently with each of those groups. The consultative process is a continuing process.

Each year when we develop our strategic goals and our performance plan for the next year, we schedule meetings with stakeholders to discuss our plans. That is done in the Wage and Hour Division, with OFCCP. OLMS meets frequently with unions on the reporting requirements, and OWCP meets with various groups including the federal agencies. The OWCP program, of course, covers only the FECA program for federal employees, and so we meet with federal agencies about the rate of injuries for their employees. The 2000, what is the name of it?

Mr. Hallmark. The Federal Worker 2000.

Mr. Anderson. The Federal Worker 2000 program is the most recent example of that type of consultation.

Mr. Roemer. Dr. Anderson, I have about another ten questions that I will submit for the written record, if that is all right with the Chairman, in order to expedite time.

Chairman Hoekstra. Without objection.

Mr. Roemer. I also have about six questions on behalf of stakeholders that I can submit for the record as well in order to try to meet your deadlines here.

Chairman Hoekstra. Without objection.

Mr. Roemer. Dr. Anderson, thank you again for your time.

Mr. Anderson. Thank you.

Mr. Roemer. I cannot wait to see Harold Ford.

Chairman Hoekstra. We actually have a little more time. It looks like the rule on Energy and Water has passed by voice. So we will be here until we either run out of questions or reach 4:00.

Mr. Schaffer.

Mr. Schaffer. Thank you, Mr. Chairman.

I want to ask a question about an omission in ESA's Management Planning Report, the June 13th, 2000 regulation that authorizes states to pay unemployment compensation benefits to employees on leave to be with newborns, or newly adopted children, an issue that is now called "Baby Unemployment Insurance." Since ESA administers the Family and Medical Leave Act, my question concerns the Regulatory Flexibility Act's requirement that agencies proposing a regulation with financial impact of over 100 million prepare a regulation flex analysis. In light of estimates that this proposal would cost billions of dollars, why didn't the Department publish a regulatory flexibility analysis with its Notice of Proposed Rulemaking, instead of waiting until the comment period closed before preparing an analysis?

Mr. Anderson. Well, Mr. Schaffer, first let me say that the so-called "Baby UI" regulation is not a responsibility of the Employment Standards Administration. That responsibility rests in the Employment and Training Administration, which I believe you will have the privilege to speak with, hopefully, soon. And so it is not possible for me to answer your question.

Mr. Schaffer. Are you not consulted, since you administer the Family and Medical Leave Act?

Mr. Anderson. But the Baby UI is not an amendment of the Family and Medical Leave Act. It has nothing to do with the Family and Medical Leave Act.

Mr. Schaffer. It has nothing to do with it?

Mr. Anderson. It is a regulation related to the Unemployment Insurance Program, which is the responsibility of the Employment and Training Administration, not the ESA.

Mr. Schaffer. Is your agency consulted or is this coordinated with your Agency in any way?

Mr. Anderson. We have members of the Agency who might participate in various internal discussions of the potential rule, but it is not one in which we have responsibility and so it would be improper for me to discuss the regulation in this setting.

Mr. Schaffer. Another question, Mr. Anderson or Ms. Wilcher. This Subcommittee received a letter last Friday from OFCCP under Ms. Wilcher's signature regarding the Subcommittee's request for a monthly summary of the conciliation agreements signed by ESA. This letter, I would ask, be placed in the record, and there are copies available for members who desire to read that letter.

I want to read OFCCP's response:

"These conciliation agreements are generally maintained in OFCCP's field offices establishing a secure system for a monthly gathering and shipment of these documents to our national office for further review and compilation." Excuse me let me restate that. "Establishing a secure system for a monthly gathering and shipment of these documents to our national office for further review and compilation would create a significant processing burden."

Let me say I am just a little amazed. It seems that ESA has no system of management to know what agreements are being signed in the field. We did not ask for the documents, we just asked for a summary.

How can OFCCP be properly managed if the field and regional offices never report their activities? Where is the quality control? Can these compliance officers just do as they please without any supervision?

SUBMITTED FOR THE RECORD, RESPONSE LETTER TO CHAIRMEN PETE HOEKSTRA, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS AND JOHN A. BOEHNER, SUBCOMMITTEE ON EMPLOYER-EMPLOYEE RELATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE, FROM SHIRLEY J. WILCHER, DEPUTY ASSISTANT SECRETARY, U.S. DEPARTMENT OF LABOR, EMPLOYMENT STANDARDS ADMINISTRATION, WASHINGTON, D.C., JUNE 23, 2000 – SEE APPENDIX D

Ms. Wilcher. Let me state that our compliance officers would argue that they are being well supervised and often. But let me say also that we enter into roughly 1,800 conciliation agreements a year. That is quite a large number. They are not all sent to the national office for approval, we have regional offices that are well staffed to monitor those. They do report to us in weekly reports, however, so we have quite a bit of knowledge about what is happening in our field. We did suggest that we might want to share summaries and I believe that was our suggestion, to share summaries of the larger conciliation agreements, those involving settlements of more than $100,000. To me they certainly are likely to be the more substantive and of greater interest to the Committee.

So I assure you in terms of the other conciliation agreements, we have, as other organizations, a chain of command that is entrusted with monitoring and making sure we have quality settlements and there is a reporting process, so we are knowledgeable. But, you know, we do not honestly monitor every single conciliation agreement. We have Regional Directors that also are part of that process.

Mr. Schaffer. If you have weekly reports, why can't you submit summaries?

Ms. Wilcher. We are happy to submit summaries. That was our offer of the larger conciliation agreements. We think that is a more manageable effort as opposed to all 1,800 conciliation agreements that to us was rather burdensome and outside the scope of what we currently do.

As I said, that was an offer that we sent to you. We await your response and we will be happy to work with the Committee.

Mr. Schaffer. What do those weekly reports include?

Ms. Wilcher. They are an update on what is happening in the field from cases that we are working on to meetings with contractor organizations. It is an internal reporting process that helps me to understand what is happening in our field offices.

Mr. Schaffer. Thank you, Mr. Chairman.

Chairman Hoekstra. Mr. Hilleary.

Mr. Hilleary. Thank you, Mr. Chairman. As I understand this Act, it requires you to develop multi-year strategic plans, annual performance plans and annual performance reports. Do you come up with all of those yourselves? Is there ever and I may have missed it, I was a little bit late on the testimony, so I apologize, but do people come in and basically audit your reports, or do you have an audit division somewhere within the same set of offices? How does this work process-wise?

Mr. Anderson. Yes. Thank you, Mr. Hilleary. There is a policy and program development process within the Department. Let me describe it very briefly. Each Agency through consultation with its national office, executives, managers, and with input from the field will develop a five-year strategic plan which sets out certain goals and objectives that the Agency's work is directed toward achieving. That plan then will also develop a performance component, which is the identification of certain annual goals toward which the programs activity will be directed.

We then identify measures, quantitative measures that would allow us to determine whether we are successful; how successful we are in reaching the goals that we establish. All of that then is reviewed by our central office, the Office of the Secretary, and our policy office and is ultimately reviewed by the Inspector General. So there is an extensive internal review process, which we have to go through before we can finally settle on what our strategic goals and performance measures are. We then have to submit all of that to the Office of Management and Budget. Each Agency has a desk officer within the Office of Management and Budget that will look at these plans and performance measures, makes comments, and as often as not, adjustments are made in light of the views of the OMB executives. All of that then is submitted to the Congress, and Members of Congress have an opportunity to opine on the adequacy of the strategic plan and on the performance measures. So there is a rather elaborate process.

Each year, and it started last year, we have to submit with our budget a performance report. That is what this report is for, Fiscal Year 1999, the first time that we submitted this under GPRA. There is a requirement to submit this report each year with our budget for the next fiscal year and that provides an opportunity for Members of Congress to comment on the adequacy of the goals and objectives, or at least the extent to which we appear to be making progress in reaching those goals.

Mr. Hilleary. Do you think the process itself is sufficient? In other words, as I was going through this voluminous amount of paperwork, about the process and of the process, it seems like the process itself is awfully expensive, both time-wise and money-wise. Do you think the cost benefit is really worth it the way it is set up?

Mr. Anderson. Well, I would have to believe that it is worth the time and effort that goes into it, and I think it is a matter of determining what the alternative is. I believe that the American people are entitled to get something of value for the taxes that they pay to operate the government.

Mr. Hilleary. Pardon me for interrupting because I am kind of out of time here. But I know the concept and the goal is certainly a worthy goal. I am just curious. Is this cost benefit analysis way of going about the way to go to reach that goal?

It seems awfully expensive. I used to be in a performance audit group in the State of Tennessee years ago.

Mr. Anderson. Yes.

Mr. Hilleary. We always came up with the same thing for everybody. It seemed as if you had done some things right, you had done some things wrong, and it gave them a license to come back and state that in order to correct these things we are still doing wrong, we are going to need more money. Nothing ever really happened from that. We were really an outside group going in and doing the auditing within the big tent of the State of Tennessee.

Your evaluators, except for when it comes to Congress, are even more of an inside the tent group, it seems to me. At least it seems like it, more than where we were in Tennessee. I always thought it was not worth the effort in Tennessee.

Mr. Anderson. Yes.

Mr. Hilleary. The goal was worth the effort to process and that is how it struck me. Maybe you do not feel that way?

Mr. Anderson. I think it is a very useful process, but ultimately you are the one to decide. This is a Congressional mandate. This is your law, which you have provided as guidance to the way the Executive Branch should operate. I believe that it is excessive, but I think that we perhaps need a little more time. It is only three years into the process, let's give it a little more time, let's continue to work on it, improve it, refine it, and see where we come out. Perhaps then your answer can be answered. But let me say that you and your colleagues ultimately will be the judge of whether or not this is the way to manage the government's affairs.

Mr. Hallmark. If I could interject just a minute, I had occasion to serve on the Department of Labor GPRA taskforce for a year a couple of years ago. I am sympathetic to the question that you have asked. If anyone looks at the layers of process and paper that flows from GPRA, there is a tremendous burden here. I think it is incumbent on both the Executive and the Congressional side to ensure that that process does not weigh this down.

Mr. Hilleary. That is why I was asking the question.

Mr. Hallmark. Bernard is exactly right. There is a kernel of substantial benefit associated with focusing on customer issues and on measuring real world results which, as I said in my comments, has made a huge difference in the way we look at what we do and the way we actually perform management in our programs. I think that is the case in a lot of places, probably not throughout the entire federal establishment. In a lot of places there has been a lot of learning that is going on, but it is very expensive.

One of the questions raised earlier, was regarding why FMLA or this or the other kind of program is not included in the goals. The fact is, if we included all of the various things we do in the goals, we would in fact be swamped. It is impossible to go through all of the processes we do and do them right and have real learning go on and touch every one of these bases. So clearly what we have done so far is pick targets that we thought were productive. Where we have picked them correctly, we have learned a lot of things. I think that has been the case with the programs that are before you today.

Mr. Hilleary. Thank you for your responses.

Chairman Hoekstra. Thank you. As Mr. Roemer and I had indicated, we also took and allowed for public questions to be submitted, and just for the audience, these questions were circulated yesterday. Mr. Roemer and I both approved the list of questions for each of us that we received from public comment and they were also submitted to the Department of Labor for their review. So I am assuming that none of these questions will be a surprise, unless we ask them differently, which we will not do.

But this gives us a little bit of an indication of what some of your customers may be asking about some of the programs. The one that I just wanted to bring forward was the one that deals with the Service Contract Act that is administered by Wage and Hour. This is something that I didn't know.

Under the Service Contract Act, the Wage and Hour Division is required to issue wage rates for all service contracts. I knew that. In order to develop wage rates for these service contracts the Department had depended upon statistics gathered by the Bureau of Labor Statistics until 1995 when this survey was discontinued. As a result, since 1995 wage rates for many service contract employees have remained stagnant. The Wage and Hour Division recently agreed to a 3.5 percent increase on the majority of wage determinations. Many employees, however, have not had an increase for two to five years.

Two questions come out of that as a result of GPRA. Does the Labor Department send a series of recommendations back to Congress as part of the annual report with some things that we can try to administer just as well as we can? We can get as good people and as good systems in place, but regardless of what we do inside, you really designed a system that is going to fail regardless of how good the people in the Department of Labor are. Congress has to go back and take a look at this. Or do you come back with a list stating that conditions have changed? The Service Contract Act is based on this for example and it is no longer happening, so we have got to rethink how this happens.

Those are the two questions for Mr. Kerr and Mr. Anderson

.

Mr. Anderson. Mr. Kerr.

Chairman Hoekstra. Okay.

Mr. Kerr. The first one a little more generally than service contracts, although this will happen with service contracts. Service contracts are one of the ESA performance goals. We are painfully aware of what happened in 1996.

We do service contracts in Davis-Bacon. There has been a lot of discussion about how Davis-Bacon wage rates are set. There has been a lot of work with Congress on looking at a way to reinvent or to re-engineer that. About the same time BLS did discontinue the survey that we used basically to set service contract rates.

That survey of BLS never quite perfectly helped with all of the wage rates for all federal service contracts. So there has always been a procedure for looking at what BLS has, looking at what the contracting associations say, looking at what the agencies say, and coming up with, after discussion, the right wage rate.

Since 1996 that process has continued. So while we did do a 3.5 percent increase across the board, basically this year there have been discussions and many rate changes between 1966 and the present, some using the Department of Defense surveys. Many of these people work for the Department of Defense. Some use the two BLS surveys that now exist, neither of which perfectly crosses over the job titles and job descriptions that we do handle in the Service Contract Act. So the balancing act of what information we have, what the contracting community needs, what the agencies need, and what the employees need has been going on since 1996. It hasn't been static.

When I got to Wage and Hour in December I knew a lot about Davis-Bacon. I didn't know a lot about service contracts and I've talked with the staff of some of the Agencies and the contracting associations through them about this. Our performance standard says that we will, this year, come up with how we are generally going to define wage rates in the future.

It is going to be very complicated. It is something that we are going to have to work out with all the stakeholders. We have to be very conscious of the fact that it will affect the real wages of real people. So it is in our performance plan, and we have been working on it. We have not raised it to your level, which is the second question you asked; "Why don't you come to us and talk about this?" The way that often gets raised with Congress is in the budget. GPRA has become part of the budget process and there will be costs associated with how we resolve this problem.

I think an option that gets put in front of me this year about how to proceed on service contracts is going to have a budget connotation and at that level it will be raised with Congress in the same way that Davis-Bacon was.

Chairman Hoekstra. What is the average age of a Davis-Bacon survey today? I think we have not revisited that issue in a few years, but I think a few years ago we visited the Department of Labor. We had hearings on Davis-Bacon. I think the average survey age was, I believe, between six and seven years.

Mr. Anderson. It is about seven years.

Mr. Kerr. The oldest is about seven.

Chairman Hoekstra. Okay. Now, just playing devil's advocate, we all know that a seven-year-old wage rate is not anywhere close to reality today. All right? Agreed? I gave you an earlier secure one today, so you give me this, okay?

[Laughter.]

Mr. Anderson. I agree.

Chairman Hoekstra. All right. So if we are talking about results and performance, isn't it unfair? I am not talking about scrapping Davis-Bacon. If we are going to have Davis-Bacon, let’s make sure we do it right.

Mr. Anderson. Yes.

Chairman Hoekstra. Let us figure out a way for Congress and for the Labor Department to stop kidding the American people. Davis-Bacon is here and if we are going to have it, the least we can do is do it right. I cannot believe that Mr. Kerr or the Labor Department feels good about sending out Davis-Bacon wages that are seven years old.

Mr. Anderson. We have a goal to reform the Davis-Bacon prevailing wage survey process to be able to produce prevailing wage surveys in each of the four industry segments in every community in which the surveys are conducted every three years. That is our long-term goal. And in pursuit of that goal, for the past three years, we have been developing ways to improve the accuracy, reliability, and timeliness of the Davis-Bacon prevailing wage survey system.

The Congress has provided $3.75 million each year since fiscal 1997. And we have pursued two paths to determine what system will be the best for achieving the goal that I just expressed. Either improving the current system by introducing substantially more technology, new decision making systems, new processes, or using BLS wage information to determine what prevailing wages should be. We have entered into contracts with the Bureau of Labor Statistics to have them examine the potential of their wage survey systems to produce evidence that would be adequate for Davis-Bacon prevailing wage purposes.

One of our GPRA goals, in fact, one of the three goals for the Wage and Hour Division is to complete the collection of information through this process of review and reform of the Davis-Bacon prevailing wage survey system. We want to be able to make a decision in the latter part of this year about which path we will follow in the future when conducting the Davis-Bacon wage surveys to achieve the goal that I indicated earlier. That is a survey in each of the four segments of the construction industry, in each of the communities every three years. So that is a good example of how the GPRA decision making process has been put to work in helping us achieve a very important policy objective.

Chairman Hoekstra. Has that result and that target date of the fall of 2000 been part of the results plan or performance plan for a number of years?

Mr. Anderson. I think that has been included in our strategic plan for about two years.

Chairman Hoekstra. Great. Thank you.

Mr. Schaffer.

Mr. Schaffer. I was actually impressed by one of the comments you made about taxpayers wanting to know if they are getting value for the tax dollars they are spending. I am kind of like my colleague.

Mr. Anderson. I know that sounds very Republican, doesn't it?

Mr. Schaffer. Remarkably so. Yes.

Mr. Anderson. Yes.

Chairman Hoekstra. Did you want to make an announcement?

[Laughter.]

Mr. Anderson. Not today.

[Laughter.]

Mr. Schaffer. I am a lot like my colleague from Tennessee who is learning. I wasn't around when we passed GPRA and I am curious about how it is working. I’d like to know what the expectations were from those who were here at the time, and what the expectations are now.

In looking through your printed testimony, the Office of Workers Compensation Programs seems to have goals that are reflective of this question of value, and dollar results for the dollars spent, which is a statement of efficiency. These goals, Goal 2.2 to produce $19 million in first year savings through periodic role management, and Goal 2.2(g) to save 19 percent annually versus the amount billed for the Federal Employees Compensation Act, Medical Services are the kinds of goals that give an indication of efficiency and effectiveness.

I would contrast that with some of the other goals that are stated for Wage and Hour, for example, to increase compliance with labor standards laws and regulations by 5 percent, to increase compliance among employers, and so on. These are regulatory goals and objectives certainly.

Mr. Anderson. Yes.

Mr. Schaffer. They really do not give me any indication, posing the question that represents 650,000 constituents, that the money spent to accomplish this is really worth the dollars that are put forward to achieve these numbers. Can you speak to that issue in general? Why don’t we see the same kinds of value measurements in the other goals as we do in the Workers Compensation area?

Mr. Anderson. Well, I think, Mr. Schaffer, the answer to that question emerges directly from the nature of the program. OWCP is a benefit program. It is a program that provides financial and other cost-using benefits to workers in this case, workers who were injured on the job.

The other parts of the agency are enforcement programs. They are programs that are aimed at implementing the enforcement of rights that are provided to workers through legislation that the Congress passes, such as the Fair Labor Standards Act, Family and Medical Leave Act, and so forth. These are all rights that workers have presumably to improve the quality of work life.

And so there is no specific financial benefit to be derived from the implementation of those worker protection policies, as would be so in the case of a benefits program like an insurance program. I think that is the difference between the two areas of responsibility that strikes me. In that sense ESA, as an Agency, is the most unusual Agency that you will have the privilege to become acquainted with through oversight hearings.

This is not only the largest Agency in the Department of Labor; it is also the most complex Agency because we do not have a unitary theme toward which our activities will be directed. We are both a benefit agency, we are an enforcement agency. We deal with a wide variety of policy, implementing more than 100 laws and numerous regulations. So I think that the answer to your question arises out of the nature of the policy that we have the responsibility to implement.

Mr. Schaffer. Nonetheless, GPRA does speak to management issues, management goals and objectives.

Mr. Anderson. Yes.

Mr. Schaffer. I think that can be measured whether you are providing a service-oriented agency versus one that is involved in financial accountability, savings provisions, health care services and so on.

Was there at any time any discussion or what is your opinion that at this point certain management deficiency measurements might be included in these goals? For example, the number of cases covered per employee, the size of staff relative to the number of cases reviewed, the contracts reviewed, and so on and so forth.

Trying to assess the dollar value of the money spent on the agency versus the regulatory goals that are achieved seems to me to be the kind of measurement question I think my constituents would like to have answered at some point in time. I am not sure these goals, first of all, allow us to get to the point where we can measure whether the money spent is achieving the results.

Mr. Anderson. Well, my colleague, Michael Kerr, is chomping at the bit, but I would like to simply comment and then ask him to amplify.

The kind of issue that you are raising, Mr. Schaffer, focuses on inputs rather than outcomes. GPRA, as I understand it, is an outcome, results-oriented policy.

Mr. Schaffer. I disagree.

Mr. Anderson. All right.

Mr. Schaffer. I disagree because if the rate of compliance is dramatically increased, it is a relevant question to know how many extra people it took to do that? Did it take the same number of individuals? Did it take more, or did it take less? That would be a relevant measure of an outcome that gives me a sense of whether efficiency is being achieved.

Whether more Americans are being regulated more efficiently is not the kind of outcome I want to know about. It is interesting. It is something that I might be curious about, but I want to know it took place, and at what cost success was achieved.

Mr. Anderson. I will only add this, and then I will very gratefully turn to Michael Kerr on this.

The appropriations process is the forum for investing the first issue that you raised. That is to say, whenever we present our budget request, we have an obligation to justify the kind of funding that we request to support various activities and the staffing level of our agencies by the work that the staff is intended to do so that we are not simply putting more people on the payroll than are necessary to accomplish the objective while achieving a certain goal. When you look at the budget process coupled with GPRA, you are able to focus on the kind of issue that you raise, but we don't have the type of goals that you expressed at this point.

Now, there is another activity going on now through our chief financial officer and there is another law that was passed a few years ago. If you will forgive me, I don't remember the name of it. I do remember though that it now is forcing us to develop measures of the unit cost of producing certain outcomes. I would like to provide the reference to this law that our chief financial officer is now engaged in applying within the Labor Department for the record, but I will turn to Michael Kerr.

Mr. Kerr. I guess I would answer that question from two ways. I do have the measure you listed. I do know how many investigations per investigator. I do know how many workers helped by and large. I do know how much in back wages collected. I do know how many cases are given to the solicitor's office to go to court.

As Dr. Anderson mentioned, this is data we have collected about ourselves for quite a while and data that we give to appropriations and to the Office of Management and Budget. What GPRA helped us with was how to use that effort and how not to misuse it. If my goal for all investigators is based on the amount of money you collect and how many people you help, they are not going to be foolish. They are going to go to big organizations that pay people a lot of money. They are going to skew where the organization puts its resources.

We have that data, but it doesn't help us answer the question about where you ought to be and how you measure what you do. So what GPRA forced us to do was know this about ourselves, but where are the compliance problems? The compliance problems after looking at several criteria turned out to be in low-wage industries, and many of those industries are fairly small. A good measure is not how many people, or how much money you brought in. While we have that data it is a question of whether that is the incentive you want to put in front of your staff and whether you can come up with other data.

All of our data prior to the baseline setting and to the GPRA kind of thinking and to the targeting was based on compliance. So immediately what you are looking at is possibly only bad actors and at industries or you are looking at some sort of skewed sample of what the United States is.

Once I have done investigations in an industry based on a random sample and set a baseline, I then think about whether I want to increase that compliance rate or move on to another industry. I then can tell you as a beginning, that we are better in garment than we are in most industries because we are still setting baselines. I can begin to tell you, I had a random sample that gave me a baseline in '98, because I know what I had deployed in '98. If I wanted to change it, I would try X, Y, and Z. I can tell you what that difference is and what it costs and what the strategies were, and I can begin to measure whether they are effective or not.

So it is not I hate to say "easy" because I spent some time in OWCP but it is

[Laughter.]

measurable. I think you can begin to show how the deployment of your resources count and what it costs to do and whether it was worth it.

Mr. Hallmark. That forces me to add a comment.

Mr. Anderson. Briefly.

Mr. Hallmark. Bernard is right, there is movement. I believe it is associated with GPRA as well as financial management, integrity and so on moves towards cost accounting requirements. It is dangerous territory and I can give you a perfectly good example in the FICA program.

FICA programs spend about 5 percent of the total costs of the program on administration. To that extent there is a focus on the part of appropriators, as there has historically always been, on discretionary issues, on how much we spend and how many cases each one of my claims examiners deals with and tries to drive the cost of that portion of the budget down. The other 95 percent of my budget, which is benefits, goes up because you do not have as many people doing the hard case management work that is involved in getting people back to work and ensuring that medical payments are correct, and so on.

So cost accounting, while it is built into these equations and will be in greater detail, is a two-edged sword. Like all these other things, it is very hard work and it is not easily interpretable. I think that is the point that my colleague Mr. Kerr is making.

But even in OWCP our measures are not easy to come up with.

Chairman Hoekstra. Thank you.

Mr. Hilleary.

Mr. Hilleary. Thank you, Mr. Chairman. I wanted to continue on my theme from the last time. First off, I have two questions and a comment in between.

The first question is do you have any internal numbers with regard to how much it costs to comply with the mandate Congress put on you in 1993?

Mr. Anderson. An estimate of how much it costs us to implement GPRA? I am not aware of any data that would allow us to measure that.

Mr. Hilleary. That would be interesting information to have, because I suspect it costs a lot of money to implement it. Anyway, if there are any internal numbers, and if you could send them over, we would be interested in them.

I don't know if I am fascinated or just intrigued or just disgruntled. I have an emotional reaction to this whole process. It is not your fault. As you say, this is a mandate placed upon you. I am reminded of the beauty queen that is asked, "What would be your most negative characteristic?" and she frets for a second and says, "I am just too friendly to everybody." I think about myself when I applied to graduate school. They always wanted to know, what your most negative characteristic was. I always responded with something like, "Sometimes I focus too intently on the things I am trying to do." Those are the kinds of things I think creep into a performance evaluation if people are more or less evaluating themselves. It seems like the evaluation process becomes more burdensome even though it is supposed to be a management tool.

I used to be a navigator on C-130s and we had to fill out this voluminous log, which I always thought was really to hang you in case you got off course. They always kept on trying to tell us this was a management tool that we should use and once in a great while it did help. Usually it was just more burdensome to try to get it all filled out. Which brings me back to this process.

I hope you will not answer me by saying "we have worthy goals here." I understand the goals are very worthy; the concept of efficiency and effectiveness is a worthy goal. That is not in question. I understand that refocusing people on results as opposed to process is a worthy goal. Since you were mandated to do this back in 1993, you are in no way at fault if the process itself is too burdensome in a cost benefit way for what we are getting out of it. But the question is if you have the opportunity to reform the process, do you think it would be worthwhile in pursuing?

I will not even ask you to testify that this process is bad. I will end up with this. Would it be a potentially worthwhile venture, if we were to have a discourse at some point about possibly reforming the process that we have placed upon you as a mandate?

Mr. Anderson. Well, I very much appreciate your question, Mr. Hilleary. I think that the Chairman of the Subcommittee and you and other Members of the Subcommittee might well want to contemplate a segment of oversight hearings asking various agencies both within the Department of Labor and in other departments to provide some thoughts in response to your question. We cannot do it today because we were not asked. It is an excellent question. There should be a mechanism to allow the agencies in the Executive Branch that are implementing GPRA to respond to the impact the implementation itself is having on those agencies and what the relative cost of that might be.

We certainly have data on the time utilization by members of our staff who have been engaged in the GPRA process. It is a little tricky trying to assign an accounting measure to that because carrying out the purposes of GPRA is part of the job of various members of the staff both in the national office and in the field in the Wage and Hour Division for example.

Michael Kerr referred to the investigation-based, compliance surveys. Wage and Hour investigators in the process of collecting data carry out those surveys, while at the same time enforcing the law. When they conduct the compliance surveys and they identify non-compliance, they don't just leave it there; or do they?

[Laughter.]

Mr. Kerr. We do not waste the investigator's time.

Mr. Anderson. Yes. That is to say, if an individual is not being paid the minimum wage and that is identified as the result of a compliance-based investigation, that individual or that group of individuals will be paid back pay as a result of this. So, the implementation of GPRA in trying to achieve the goal of increasing compliance by setting the baseline and going back later and seeing what the impact is, is done in the course of the normal work of the individual in the field enforcing the law.

That would be called a joint service problem in economics. It is a very interesting micro-economic intellectual problem that I will not bore you with. You might want to request this kind of information from those of us who will have to come before this Committee for oversight in order that we might have an opportunity to opine on the value of GPRA.

Mr. Hilleary. Well, if I could respond for just 15 seconds, Mr. Chairman? I think that would be worthwhile because we have mandated you to make sure that Wage and Hour laws are complied with.

We had a great governor in Tennessee, Lamar Alexander, who was trying hard to create some accountability in education in Tennessee and he came up with what was a first-stab effort called "The Better Schools Program." It required teachers to do this, and this, this, and this in order to get more value added at the end of the process. The teachers complained that the process took so much time to make sure you had lesson plans that actually teaching the children better to achieve that higher goal at the end was eaten away because all that time and effort had to go into the process.

Anyway, thank you for your response, and thank you for testifying today.

Chairman Hoekstra. Thanks to the panel. This is the first GPRA hearing that we have had and it was fascinating. I am hoping that over the coming months and coming years that this can get to be a very meaningful and worthwhile dialogue between the agencies and Congress. We are looking forward to the hearings that are forthcoming.

With that, I have no additional comments, except thank you very much for being here and we look forward to working with you over the coming months.

Mr. Roemer, do you have anything?

Mr. Roemer. No further questions, Mr. Chairman.

Chairman Hoekstra. With that the Subcommittee will be adjourned.

Whereupon, at 4:14 p.m., the Subcommittee was adjourned.