Urgent attention needed to refocus OPM as federal workforce leader, NAPA says

After years of neglect, the Office of Personnel Management needs more help, attention and funding to improve, strengthen, and strategically restructure the agency as the federal government’s independent human capital leader, according to a new report from the National Academy of Public Administration.

The academy on Wednesday released the results of a year-long study of OPM, as well as 23 recommendations to reposition the agency as a strategic, forward-thinking leader.

The report was highly anticipated, after Congress and employee groups spent at least two years contemplating a proposal from the Trump administration, which recommended merging parts of OPM with the General Services Administration and other functions with the Executive Office of the President and Office of Management and Budget.

Congress ultimately blocked the OPM merger with the 2020 annual defense policy bill and appropriated funding for NAPA to conduct a sweeping review of the agency and its statutory functions.

A five-member panel of NAPA fellows spent the last year reviewing documents, previous executive orders and laws — and interviewing officials at OPM, GSA and OMB. It also spoke with chief human capital officers and conducted a survey of agency HR leaders.

NAPA sees its report and recommendations as a roadmap for both Congress and the new administration to refocus federal human capital as a top government priority. OPM, the academy said, must be at the center of those discussions.

“Timing is fortuitous,” Terry Gerton, NAPA’s president and CEO, said in the report. “With a new administration and Congress, the report provides an opportunity for a fresh look at changes OPM can make to become both the organization and the governmentwide leader it was always meant to be. The new administration cannot accomplish its ambitious agenda without an effective workforce — an effective OPM is absolutely critical to this undertaking.”

OPM thanked NAPA for the report and said it will consider the academy’s recommendations.

“The effort to dismantle OPM under the previous administration was disruptive to agency operations and detrimental to workforce morale,” Kathleen McGettigan, the agency’s acting director, said Wednesday in a statement. “We are pleased to close that chapter and eager to continue the important work of reinvigorating the agency, rebuilding workforce capacity, implementing a sustainable funding model and reasserting OPM’s posture as a strategic partner to federal agencies on matters of human capital management.”

The agency has another six months to provide a formal response to the NAPA report to Congress.

“We may not agree with all the findings here, but we’ll certainly give it all careful consideration,” a senior OPM official told Federal News Network. The official noted the agency was especially gratified the academy’s recommendations reaffirmed the need to build a strong and empowered OPM.

Congress to clarify, redefine roles for OPM

What NAPA concluded in its review isn’t necessarily surprising for anyone who has been following OPM and its challenges in recent years.

Current laws are often confusing, and in some cases, don’t clearly define OPM’s roles or authorities. OMB has expanded its role in federal human capital over the years, which in turn has weakened OPM’s own influence and leadership across government.

The agency has weathered year after year of inconsistent leadership and funding challenges, to which Congress has paid little attention. OPM currently receives funding from appropriations and fees, and the fragmented budget structure has prevented the agency from making progress on several needed IT modernization initiatives.

NAPA also confirmed the toll that the OPM-GSA merger itself took on the organization, which Federal News Network has previously reported.

“The proposed OPM reorganization/merger, along with leadership changes, created employee angst and uncertainty across the agency, contributing to employee turnover, declining morale, and trust issues,” the NAPA panel said. “Staff turnover reduced staff capacity to carry out functions, while concern over the future of the agency affected recruitment.”

Agencies also view OPM’s policy shop as largely reactive rather than proactive. OPM rarely pursues a legislative or policy agenda that promotes change, and it doesn’t have the capacity to perform more forward-leaning research to predict workforce trends.

The Chief Human Capital Officers Council is underutilized, and OPM’s approach to working with the council has limited its effectiveness, NAPA said.

The CHCO Council stopped meeting for a period of time with the OPM director as the chairman. Agencies began to meet on their own without OPM at all, Peter Levine, a NAPA fellow and panelist, told reporters Wednesday.

“That’s an indication of what the status of OPM was among human capital officers across the federal government,” he said. “It was, I’m afraid, viewed as being too often absent on issues that mattered.”

To resolve these challenges, NAPA recommended Congress clarify and redefine the agency’s role and the responsibilities and qualifications of the OPM director, deputy director and its career chief management officer.

It also recommended Congress reestablish civil service subcommittees in both the House and Senate to support and champion federal workforce policy changes and provide greater oversight.

OPM should continue to manage retirement, healthcare, panel says

Notably, NAPA didn’t recommend moving whole pieces out of OPM.

The previous administration proposed moving retirement and healthcare services out of OPM and into the General Services Administration.

The academy panel largely disagreed with the suggestion, noting that by and large, OPM does an admirable job with managing the federal health insurance and employee retirement programs, despite their many challenges.

“While concerns were raised about the timeliness of retirement processing, stakeholders were also quick to point out the complexity of the myriad retirement programs that OPM administers,” the NAPA report reads. “They also acknowledge that many of the processing errors originate in the agencies, but agencies are often quick to point the finger to OPM for problems generated within their own domain.”

Retirement and health insurance are also “essential components” of the human capital lifecycle, the panel said, noting “if it is not broken, don’t move it.”

In addition, NAPA did not recommend a wholesale move of HR Solutions, OPM’s fee-for-service entity that provides training and guidance on complex human resources laws, policies and regulations. HR Solutions also runs USAJobs.gov and a suite of staffing, hiring and onboarding services.

Though NAPA acknowledged that while it may still be reasonable for OPM to charge for some of those services, the agency should offer other training — including policy interpretation and support — at no cost.

The academy pointed to delegated examining training as an example, which OPM requires all HR staff to take and earn a certification. The agency offers a $1,142, three-and-a-half-day training program to help HR practitioners prepare for the certification test, but NAPA said HR staff aren’t taking the course due to a lack of funding.

“What we don’t think OPM should be doing is charging to interpret the rules that they write and to help agencies navigate their way through the system,” Levine said. “OPM should be in the position as a strategic human capital agency of helping agencies solve their human capital management problems.”

The agency will need additional appropriations to provide these services at no cost, as OPM relies, in part, on the fees it receives to fund the organization. And to address its IT modernization challenges, NAPA recommended Congress establish a designated working capital fund.

Funding would be contingent on “the completion of an enterprise-wide IT requirements and cost analysis to enable a more flexible and accountable internal process for funding IT operations and maintenance,” NAPA said.

Congress should resolve OPM’s funding challenges

The academy emphasized on multiple occasions that setting OPM up for success will take more funding. The agency needs new tools to improve data collection and expand research on the federal workforce.

And as its inspector general has pointed out, OPM needs a dedicated funding stream to modernize its legacy systems, which past agency leaders have tried but often failed to improve.

“OPM should prioritize IT modernization and seek funding from Congress to modernize the [Electronic Official Personnel Folder] and develop an employee digital record, upgrade technology systems supporting the federal retirement programs, enable a modern human capital data and analytics platform and transform its website to be both user-centric and user-friendly,” NAPA said.

Though the academy didn’t recommend a wholesale lift-and-shift of OPM entities to other federal organizations, it does suggest giving individual agencies more authority to handle their own personnel transactions, such as direct-hire decisions, dual compensation waivers and early retirement approvals.

Agencies currently rely on OPM for those compliance checks, but giving individual departments that responsibility would allow them to take charge of their own personnel needs. It could also free up OPM to be more strategic and forward-leaning on governmentwide workforce trends and challenges.

Congress, of course, would have to rewrite the existing statute to give agencies that authority, instead of OPM.

In the meantime, OPM and employee groups have said they’ll continue to read and review NAPA’s recommendations. The academy’s report is 114 pages long.

Rep. Gerry Connolly (D-Va.) said he looked forward to the confirmation of a new OPM director, so Congress could work with the agency to implement organizational improvements.

“For too long, OPM has been unable to achieve its potential of infusing data and evidence into short- and long-term workforce planning,” said Connolly, who advocated for the NAPA review back in 2019. “This NAPA study offers a blueprint to rebuild OPM and fortify merit system principles and expertise throughout government so no future administration can attack its foundations.”

The Biden administration nominated Kiran Ahuja, a former OPM chief of staff, to lead the agency. A senior OPM official said the Biden administration is committed to providing strong, consistent leadership at the agency, and Ahuja is someone who can “hit the ground the running.”

“We have some rebuilding to do. We’re still trying to stabilize our budget situation.. and we have some big challenges to confront,” the senior official said. “This report will give us another opportunity to reinforce to our workforce that this administration is very much committed to a strong and empowered OPM.”

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