“OPM’s budgetary issues are affecting its ability to fund projects that are needed to improve and modernize OPM’s IT platform, the processing of retirement claims and the management and delivery of federal employee benefits, such as the Federal Employees Health Benefits Program,” Norbert Vint, the deputy inspector general performing the duties of the agency’s IG, said in his annual report identifying OPM’s top management challenges.

The agency itself declined to comment on the IG’s report and its recommendations.

The funding shortfall stems from the decision Congress and the administration made to move the governmentwide security clearance business — which brought in more than $2.2 billion in revenue to OPM in fiscal 2019 — from the agency to the Defense Department.

OPM managed to bridge a $70 million funding gap this year by securing additional appropriations from Congress and negotiating a buyback of its IT security clearance services with the Pentagon.

But the DoD buyback arrangement will conclude at the end of 2021, and OPM needs to secure additional funding from Congress for the next year and into the future, the IG said.

The administration’s desired OPM merger with the General Services Administration continues to evolve — even as the moves are technically on hold pending a congressionally-mandated review. That uncertainty still looms over the agency and raises questions for OPM’s future, including the management of its own buildings, the IG said.

Five-week sprint improved retirement customer services, to an extent

Vint offered a candid assessment of OPM’s long-standing efforts to modernize the legacy systems that power the agency’s retirement services.

The agency has recently implemented short-term fixes to address retirement customer service challenges. OPM contracted with McKinsey and Company, which helped the agency with a five-week sprint to address some of the problems.

OPM, for example, upgraded telecommunications circuits, call center infrastructure and automated call distribution software, which should cut back on downtime and help customer service agents deal with call volume.

It also added a new interactive voice feature, allowing the agency to more effectively route calls. Callers can also request a callback without losing their place in line, according to the IG. These activities helped, Vint said, but they’re not enough.

“While OPM has enhanced Retirement Services call center operations, fundamental change will require an investment of time and resources and improved business processes,” Vint wrote. “The technology and infrastructure is not optimized for true call center operations. OPM is considering a cloud-based call center solution as a potential future support platform.”

OPM has a ‘compelling’ IT vision but needs millions to execute it

Beyond some recent successes with OPM’s call center, the agency needs a long-term plan to modernize key systems.

According to the IG, OPM’s chief information officer detailed a “compelling vision” for IT modernization at the agency over time — if the plan has funding, staff and support.

OPM again commissioned a consulting firm to develop a path forward for the CIO’s IT modernization vision and estimate what resources it would take to achieve it.

“This study resulted in recommendations for a phased approach that starts with modernizing and stabilizing core IT systems and processes, and building an effective organizational structure within the agency’s OCIO to implement the modernization initiatives,” Vint wrote. “OPM’s chief information officer has often described an IT deficit at OPM that has resulted from years of deferred IT maintenance and inadequate technology funding. The focus of phase one will be to build the foundation for a mature, stable and consistently implemented IT program that is on par with industry standards.”

But OPM and its CIO face several challenges in achieving that phased vision. The CIO shop is “severely understaffed,” according to the IG. And because the CIO hasn’t always been able to deliver the IT services OPM’s program offices have wanted, the OCIO still lacks influence throughout the agency.

Still, achieving a successful “phase one” modernization hinges on OPM’s ability to secure enough financial resources, the IG said.

McKinsey and Company estimated OPM will need an additional $205-to-234 million more in funding over the next three years to achieve its IT modernization goals, plus $55 million each year after to properly maintain the enhanced environment.

In addition, OPM needs more IT funding to cover the shortfall left by the transfer of its security clearance business. OPM’s National Background Investigations Bureau contributed $18 million more in IT services than it consumed in 2019, meaning the security clearance business “essentially subsidized IT services” for other agency program offices, according to the IG.

Even with those challenges, OPM and its CIO have potential, the IG said.

“The agency’s challenge is to take advantage of this opportunity, seek appropriate funding and start on its modernization journey,” Vint said. “It will also have to minimize the voices of the self-interested naysayers, and start to change the agency culture to an enterprise-wide mindset that values the role of the federal chief information officer as a strategic business partner who is critical in reaching organizational goals.”

Funding woes inhibit potential FEHBP improvements

OPM’s financial uncertainty has also hindered its ability to effectively administer the FEHBP, improve the program and weed out waste, fraud and abuse, according to the IG.

For example, OPM currently relies on FEHBP enrollees to self-certify their family members or other dependents are eligible for coverage, and there are no requirements for them to submit proof verifying their identity.

About 1 to 3% of spouses and 4 to 12% of children are actually ineligible for the FEHBP, according to OPM estimates, and the agency may lose up to $3 billion a year by allowing these dependents improper health coverage, the IG said.

“Again, this is an issue that OPM recognizes and is trying to address through the development of a central enrollment portal,” Vint wrote. “However, OPM has not been able to sufficiently fund this project and therefore the timeline to fully develop and implement this needed system is still unknown.”

In addition, competing budget demands mean OPM hasn’t been able to conduct an extensive and independent review of the FEHBP’s prescription drug benefits, a study that the agency agreed it needed to pursue, the IG said. OPM last conducted a similar study back in 2010.

But it came up mostly empty-handed.

Though OPM, GSA and Office of Management and Budget leadership did form working groups and met frequently to discuss the proposed merger, the plans, business cases and cost analyses they developed contained few actionable details, GAO said this week in a new report on the administration’s reorganization initiatives.

The review has been nearly a year in the making after GAO testified at a House Oversight and Reform Committee hearing on the OPM-GSA merger back in May 2019.

GAO at the time said neither OPM nor GSA had satisfied the best practices and planning requirements auditors usually look for when evaluating the viability of a major reorganization effort like this one.

One year later, the administration still hadn’t satisfied the vast majority of those best practices, GAO said.

OPM and GSA general counsel offices never provided a description of the legal authorities they believed they already had or needed to carry out pieces of the merger.

The two agencies did, according to GAO, consider the upfront costs that might be associated with the merger. But the agencies did not finalize specific metrics and targets associated with the moves.

“Major change initiatives should be based on either a clearly presented business case or analysis of costs and benefits grounded in accurate and reliable data, both of which can show stakeholders why a particular initiative is being considered and the range of alternatives considered,” GAO said. “While OPM officials had some information on the costs and benefits they planned to achieve by merging functions with other agencies, they did not have an analysis or underlying data supporting their conclusions.”

OPM did give GAO a description of its financial challenges, a qualitative business case and a list of other states and foreign countries that had an integrated administrative agency, as well as an estimate of the potential cost savings for the merger.

But the documents didn’t have specific, quantitative outcomes or metrics, GAO said.

Efforts to engage OPM employees and other stakeholders in reorganization planning also came up short.

“We found that OPM’s early outreach efforts to employees and stakeholders were insufficient, the agency did not have a plan for incorporating employee and stakeholder feedback, and it did not share relevant implementation details that may have affected employees and stakeholders,” GAO said.

OPM later provided GAO with a list of the calls, meetings and townhall discussions agency leaders held with employees, Congress and other stakeholders, but the events all began months after the merger plan had been related to the public.

Agency leaders were concerned about employee engagement, and then-acting OPM Director Margaret Weichert launched an internal survey to gauge morale. She shared the results of the survey and held listening sessions to discuss them with the workforce, GAO said.

“However, OPM officials did not determine how they planned to use these communications to sustain and strengthen employee engagement,” GAO said. “In November 2019, OMB staff told us that because they were still in the planning stages of the reorganization, the proposed reform had not yet involved major changes for employees, so they put employee engagement efforts on hold.”

Current and former OPM employees have previously told Federal News Network the merger proposal created uncertainty and fostered low morale within the agency.

In addition, none of the agencies ever explained how the merger would resolve longstanding management challenges — or why GSA was better equipped to handle OPM’s high-risk IT systems, GAO said.

“In November 2019, OMB staff told us that, because the proposed merger was a long-term effort and plans were still under development, they had not yet determined how our high-risk and other management challenges would be addressed,” the report reads.

Agency officials gave a similar response to explain why they hadn’t yet finalized a top-to-bottom implementation plan for the merger or a comprehensive plan for the OPM and GSA workforces.

GAO offered no specific recommendations for OPM, GSA or OMB, instead acknowledging the year-long, congressionally-mandated study the National Academy of Public Administration will conduct.

NAPA and OPM signed a contract back in mid-March, and the academy has chosen five fellows to serve on the study panel.

Security clearance transfer earns relatively high marks

GAO’s assessment of OPM’s transfer of the National Background Investigations Bureau to the Pentagon was significantly more positive.

The Pentagon stood up a Personnel Vetting Transformation Office (PVTO), which was initially designed to oversee and implement the change management activities associated with the security clearance transfer. The office today is managing future changes to the broader clearance process.

“The PVTO director also showed us a detailed implementation plan organized around the nine functional areas identified in the broader joint transfer plan,” GAO said. “The implementation plan tracked thousands of activities and provided a detailed timeline for completion. The director also provided us a dashboard that his team used to track implementation progress. The director told us that his office used the dashboard to manage and monitor the transfer daily. The dashboard allowed the implementation team to identify areas where attention was needed using red, yellow, and green stoplight indicators signaling the status of major objectives.”

OPM and DoD managed to meet nearly all of GAO’s best practices for reorganization,

Some 2,979 NBIB employees successfully transferred to DoD’s pay and personnel system at the Oct. 1 deadline; 17 employees chose to retire.

NBIB officials told GAO they began townhall meetings with their employees as early as July 2017, when proposals to move portions of the bureau to the Pentagon were still under consideration in Congress.

OPM surveyed NBIB employees last April, ahead of the upcoming transfer to DoD in October. The goal, GAO said, was to collect information on employees’ perceptions of the transition to the Pentagon, their work experiences, job satisfaction and whether they intended to leave their positions.

Two-thirds of the NBIB workforce said they felt extremely informed to somewhat informed about the upcoming transfer. Another one-third said they didn’t feel informed at all.

“When asked about satisfaction with involvement with decisions that affect their work, 38% of respondents were positive, 34% were neutral, and 28% were negative,” GAO said.

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Agency reorganizations, relocations and mergers had a noticeable impact on employee engagement and morale in 2019, according to this year’s Best Places to Work in the Federal Government rankings.

The rankings, produced by the Partnership for Public Service and Boston Consulting Group, show a wide array of story lines. The Partnership uses data from the Office of Personnel Management’s annual Federal Employee Viewpoint Survey results to develop rankings for 17 large agencies, 25 midsize agencies, 28 small agencies and 420 subcomponents.

Overall, employee engagement across government sat at 61.7 points out of 100, dipping just slightly by 0.5 points in 2019. The latest results are a surprising show of resiliency among agencies during a tumultuous year, the Partnership said.

But for some agencies, the turmoil of reorganizations, relocations and proposed mergers was just too much to handle.

“In many instances where you’ve seen significant reform or change — a proposed change [or] reorganization — you’ve seen some significant drops,” Max Stier, president and CEO of the Partnership for Public Service, said on the Federal Drive with Tom Temin. “That’s the case for the Corporation for National and Community Service, where they had gone through a major reorganization. It can lead to significant changes in employee engagement.”

The Corporation for National and Community Service took a 27-point nosedive in 2019 for an engagement score of 39.3, according to the rankings.

Other agencies and their subcomponents facing significant reorganizations and relocations experienced similar and drastic declines.

On first glance, it seemed the Office of Personnel Management managed to withstand the uncertainty that came with the Trump administration’s proposed merger with the General Services Administration.

OPM sat in the middle of the pack among 25 other mid-size agencies in 2019, improving its score by nearly two points over the previous year. But a closer look at the agencies’ individual subcomponents reveals a different story.

OPM’s healthcare and insurance organization, which lost its longtime director to retirement this year, fell 12.9 points in 2019. OPM employee services, which handles a variety of governmentwide policymaking activities, dropped by 12.6 points.

The agency’s Office of the Inspector General fell nearly five points, while OPM’s Merit System Accountability and Compliance dropped 33.9 points over the past year.

Employees at all four of these OPM organizations faced uncertainty in 2019 as the Trump administration continued to pursue a proposed merger with GSA. That anxiety, as Federal News Network has previously reported, has plummeted morale and driven top talent from the agency, according to several current and former OPM employees.

Not all OPM organizations experienced such drastic nosedives in employee satisfaction this year. OPM Retirement Services improved by more than three points, and the agency’s fee-for-service HR Solutions shop saw a 1.4-point bump in a positive direction.

The National Background Investigations Bureau, whose employees faced their own degree of uncertainty with their transfer to the Defense Department earlier this year, improved 6.7 points.

Meanwhile, scores for the two research bureaus at the Agriculture Department that have moved to Kansas City this year experienced double-digit decreases.

USDA as a whole dropped another 2.5 points in 2019, where it sits just above the last-place Department of Homeland Security among very large agencies.

Employees in small organizations often feel change, uncertainty and stress more deeply and personally, said Danny Werfel, managing director and partner for BCG. It’s up to individual leaders to address those changes head-on within their organizations, he added.

“When the leaders are very focused on the health of the organization [they ask], what do we need to do to look inward to improve our abilities and our tools? You feel it very clearly. It has an impact and it inspires you,” Werfel said. “At the same time if you feel like your leaders are not focused on that, they’re focused looking outwardly and not really thinking about how to invest in the organization, you feel that just as viscerally.”

Though DHS itself fell by less than a point in 2019, a few of its own subcomponents saw noticeable  improvements.

The Secret Service continued a multi-year effort and improved its engagement score by nearly nine points in 2019, marking a third consecutive year of progress on the Best Places to Work rankings.

The Coast Guard, Cybersecurity and Infrastructure Security Agency and DHS’ Office of the Secretary also saw improvements in 2019.

At the top of the pack, several large agencies saw sustained improvement and built on their progress from prior years.

NASA, again the number one large agency, marked its eighth consecutive year of improvement on the Best Places to Work rankings. It sat a whole 10 points above the second-ranked agency, the Department of Health and Human Services. HHS rose again in the rankings for its fifth straight year.

Meanwhile, the intelligence community came back in a “big way” in 2019, Stier said, despite several high-profile events involving IC agencies. The intelligence community managed to improve by 3.6 points this year, where it now ranks third.

“It speaks to the leadership of the folks inside the intel community and their focus on creating work environments to allow that mission-driven workforce to do their jobs,” Stier said. “That’s what’s important here, providing opportunities for federal workers to grow and to do what they’re there for, which is serve the public.”

OPM’s inspector general in May presented a critical assessment of the administration’s efforts to justify the GSA merger.

But many of the IG’s concerns then remain today, as OPM still largely doesn’t have a documented plan, cost-benefit analysis and timeline for the proposed merger, Norbert Vint, OPM’s deputy inspector general performing the duties of the IG, wrote in a recent report detailing the agency’s ongoing management challenges.

“The specific details of the full OPM/GSA merger continue to evolve and every iteration of the proposed reorganization would fundamentally alter how agency functions and duties are performed,” the IG wrote.

Beyond the IG’s latest anecdotes about the proposed OPM-GSA merger, here are five other highlights that illustrate the agency’s ongoing challenges — and a few points of progress — headed into fiscal 2020.

IG concerns with OPM-GSA merger persist

Though OPM seems to be aware of the risks of the merger — the IG noted the agency was using a Six Sigma process designed for mergers and acquisitions to monitor and steer the reorganization — OPM still lacks a timeline, a cost-benefit analysis and an explanation of what legislative or administrative authorities it will use to carry out all or parts of the proposal.

A series of alternatives to the OPM-GSA merger is missing as well, Vint said.

This is especially evident, the IG said, when it comes to the administration’s plans to transfer the Performance Accountability Council, the Chief Human Capital Officers Council and the Performance Management Office.

The administration said this past summer it would move the administrative staff and support for these councils to GSA. Yet cost-benefit analyses of these transfers haven’t been completed, the IG said, and OPM can’t guarantee the staff currently working for these councils will retain employment for their organizations at GSA.

“The agency has not conducted a business or cost-benefit analysis to justify the move of either council,” the IG wrote. “For example, the staff subject to the transition of the Chief Human Capital Officers Council to GSA would be appointed to new positions non-competitively once GSA cleared the positions through the inter-agency career transition assistance plan. Not only does this process not guarantee current OPM staff reemployment at GSA, OPM has not conducted an assessment of the costs associated with this workforce restructuring.”

Beyond the basic planning for the OPM-GSA merger, the IG urged the agency to continue to educate the workforce about its plans for the reorganization to keep them “engaged and productive.” It also noted staff surveys showed “confusion and uncertainty related to the proposed merger.”

NBIB transfer went well, IT untangling more complex

Pentagon officials have applauded a relatively smooth transition of OPM’s National Background Investigations Bureau to the Defense Department in recent months, and the effort earned some praise from the OPM IG as well.

Vint said NBIB and DoD spearheaded the transfer of OPM employees from Title 5 to Title 10, created a working capital fund at the Pentagon and made plans for the ongoing upkeep of legacy IT systems.

“We are … encouraged both by the dialogue between the two agencies, as well as by NBIB’s efforts to thoroughly study and document this transfer,” Vint wrote.

The IG also praised OPM and the administration for securing $48 million in additional appropriations for the agency this year. OPM suffered an immediate budget shortfall of $70 million when NBIB and the security clearance business moved to the Pentagon.

What comes next, however, will be much trickier.

The Defense Counterintelligence and Security Agency will continue to use OPM’s legacy case management systems until the Pentagon completes the development of a series of brand new systems, called the National Background Investigations Service.

NBIS development will take some time, the IG said, untangling legacy systems from the rest of OPM’s IT systems will be a “significant short-term challenge for the agency.”

“Complicating the transfer is that the NBIB systems reside on OPM’s mainframe, which are tightly integrated with other OPM legacy systems,” Vint wrote. “OPM’s CIO indicated that the plan is to untangle the NBIB systems from these other systems and transfer responsibility for hosting and managing them to DCSA. While this does make some sense, it will be technically challenging and costly to achieve.”

Prescription drug costs make up quarter of FEHBP

The cost of prescription drugs makes up 27% of the total expenditures in the Federal Employees Health Benefits Program, and OPM needs a long-term strategy to manage those rising costs in the future, the IG said.

“We believe the need for clear and extensive analysis of the FEHBP drug program cost-saving options is long overdue,” Vint wrote. “The last time OPM formally studied the issue was approximately nine years ago. The PBM and prescription drug landscape has significantly changed since 2010.”

The opioid epidemic also complicates OPM’s efforts to keep FEHBP costs down.

Between 2012 and 2018, 26,000 FEHB participants received emergency care for opioid overdoses to the tune of $11 million, according to the IG. The program also spent $151.2 million on opioid antagonist prescriptions, such as naloxone, during that same time period.

Though OPM has made opioid treatment and prevention a priority in its call letters to FEHB carriers in recent years, the IG sees room to simplify FEHB program data and create a single repository of information.

Currently, OPM relies on FEHB carriers to self-report on how they’re complying with the agency priorities for the program.

“The complicated and layered nature of carriers and subcontractors should encourage OPM to explore a single data repository for claims information and a dedicated program integrity office to
provide a single source of internal controls, oversight and trend analysis as part of
agency efforts to combat the opioid crisis,” the IG wrote.

Progress on improper payments?

OPM’s retirement services noted some progress on its improper payment rate in recent years, according to the IG. The rate fell slightly from 0.38% in fiscal 2017 to 0.36% in 2018, with totals for the Civil Service Retirement and Disability Fund falling from $313.8 million to $284 million during that time.

This is one of the lower improper payment rates among agencies who disperse benefits in government, the IG said.

However, the IG still considers OPM’s improper payment rate to be a high risk, and it suggested the agency continue its efforts to modernize retirement processing and develop a claims tracking system.

Improper payments for the FEHBP, however, increased significantly — from $28 million in 2017 to $71.4 million in 2018, according to Vint. The IG said it’s concerned these rates are quite accurate and may not be calculated correctly.

Retirement claims are a mixed bag

OPM did, in fact, meet its stated goals for processing retirement claims in recent months, according to the IG. On average, the agency completed retirement claims in an average of 56 days between October 2018 through July 2019.

But OPM’s response times on its customer service phone line averaged 12 minutes during that same time period, well above the agency’s goal of five minutes.

Still, the IG noted some steps the agency has taken in recent years to modernize the retirement claims process, a project that’s moved slowly in fits and starts for the past two decades. OPM, for example, has completed at least one out of seven planned agile sprints to develop an online retirement application form, Vint said.

By now everyone knows of the fiasco of the Agriculture Department’s attempt to move two small policy bureaus to Kansas City. As Federal News Network’s Nicole Ogrysko has been reporting, half the staff selected to move has left the agency. Many joined agencies so they wouldn’t have to relocate. Ag management screwed up the buyout offer by yanking back half of the promised $25,000 because too many people took them up on it.

The episode gives Kansas City a bad name, and no one was certain whether the agencies would end up permanently in Kansas or Missouri. The move inspired employees to join one of the federal unions.

Sadder, though, is that the move itself isn’t necessarily a bad idea. At least it merited serious discussion. I don’t doubt that Secretary Sonny Purdue gave it a lot of thought and was well motivated. Perhaps nothing he might have said or done would have convinced the people of the Economics Research Bureau or the National Institute of Food and Agriculture this was a good idea.

Now the move is sort of a hash. USDA has delayed Kansas City reporting dates and asking relocation refuseniks to stick around in Washington. A spokesperson said USDA is concerned with mission continuity.

Equally troubling is the stuck-halfway reorganization of the Office of Personnel Management. Its National Background Investigations Bureau moved on Tuesday, under a new name, to the Defense Department. The move deprived OPM of $70 million in revenue, which Congress mostly plans to compensate with appropriations — that is if it can actually pass a budget for 2020.

The Trump administration wanted to move the remainder of OPM under the General Services Administration, with the federal employee policy functions moving to the Office of Management and Budget, a la the Office of Federal Procurement Policy. Members of Congress range from against the idea, to wanting to see more detailed plans, to “meh.”

The result? As you might expect: Low morale and an exodus of leadership streaming out of OPM. One official told FNN, “Morale is extremely through the floor.” Where I live, that’s the basement.

OPM has never been federal employees’ favorite agency. Its service on retirement benefits has been spotty, it had the famous data breach in 2015, and it sometimes botches snow-day announcements. It’s often slow to come up with specific procedures for new policy, like phased retirement. But it does do good. And in the world’s largest employer — the US government — it makes sense to have an agency responsible for the needs of more than 2 million civilian employees. Here again, OPM’s mixed heritage at least merited a discussion about what to do with it.

Now 2020 appropriations language would prohibit the merger with GSA. The administration insists the merger will happen. The outcome is all mixed up with separation of powers, failure to consult one another, and the bigger maelstrom of our divided politics.

The reorganization of the Overseas Private Investment Corporation, the acronym for which sounds like a Capitals loafing play, happened, from what we can tell, smoothly and with little outcry or drama. OPIC is about to get a new name: The U.S. International Development Finance Corporation, or DFC. In fact, that also happened Tuesday. In so doing the new DFC incorporates a piece carved out of the U.S. Agency for International Development and follows a law supported by the Trump administration signed in 2018.

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My interview with USAID’s Karl Fickenscher details what’s going on. But the basic idea is to give OPIC wider investment options and tie it more closely to U.S. foreign policy. Everybody who’s in Washington stays in Washington.

The contrast between OPIC and the OPM and Agriculture episodes offers some lessons, if anyone learns them:

• Reorganizations are often necessary and useful. But they require a strong and clearly-stated rationale.
• Administrations and Congresses both think they run the government. They do, that’s why they need to hold their noses and work together.
• Executives must listen to employees and ensure they feel part of the process. Do I even need to say this? True, they don’t get a vote, but people react better when they feel somebody listens to them.

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It’s official: The National Background Investigations Bureau, along with its personnel, resources and the security clearance program itself, are now a part of the Defense Department.

Both the Pentagon and the Office of Personnel Management held a “casing of the colors” ceremony Monday morning at the National Museum of the Marine Corps in Quantico, Virginia, to recognize the formal merger of the Defense Security Service, NBIB and the Defense Department’s Consolidated Adjudications as the Defense Counterintelligence and Security Agency.

“This is really more than symbolic, in terms of a service or ceremony,” a DoD official told reporters Tuesday afternoon. “It really noted that we are a new and frankly united workforce working against a fairly broad but well-defined mission. We’ve created what is arguably the single largest security-focused agency in the federal government.”

Over the weekend, DoD successfully transferred all 2,900-3,000 NBIB federal employees into defense payroll and personnel systems.

NBIB employees received official offers to join DoD back in July. All but a handful or two of the existing NBIB employees chose to make the transfer, the official said. Those who didn’t accept the transfer have chosen to retire.

NBIB employees moved to new personnel system

For the employees themselves, the transfer shouldn’t immediately change much, DoD officials reiterated.

The agencies used a “transfer of function” authority to officially move NBIB’s existing workforce from OPM to the Pentagon.

NBIB investigators were previously considered title 5 employees.  Now, they’re considered title 10 employees under the Defense Civilian Intelligence Personnel System, which has a two-year probationary period, as well as different performance standards and pay bands compared to title 5.

Most NBIB employees will continue to report to their same duty stations for work.

NBIB’s contracts and service providers have also moved to the Pentagon. Those contracts are now defense contracts, the DoD official said.

The DCSA will perform background investigations for 105 agencies, or 95% of government. Beyond its personnel vetting mission, the agency will also provide industrial security services for 33 federal agencies and will continue to expand its protection of critical technology.

“Today is day one, but it’s the beginning of the next adventure here,” the official said.

“We’re going to focus first on where can we continue to improve our processes and improve those activities and then realign the organization more precisely to meet those evolving requirements,” the DoD official said. “Not only are we looking to work on the processes that exist today, but we have two external drivers helping us focus on what tomorrow looks like.”

One of those drivers is the Trump administration’s effort to overhaul the entire suitability, credentialing and security clearance enterprise, which hasn’t gotten a serious update in decades.

That effort, called the Trusted Workforce 2.0 initiative, is supposed to drastically change how government broadly grants trust among its employees and contractors. Defense and intelligence officials have been designing both the DCSA as a new organization — and the end-to-end IT and case management system known as the National Background Investigation Service (NBIS) — with this approach in mind.

“The end state of this is better security, better efficiency, protecting our people, our programs and our information, aligned to our national security strategies and our national defense strategies, really recognizing the environment we are in now and expect to be in the future, where security focus is elevated across the board,” a DoD official told reporters.

Clearance process modernization ‘long time coming’

The security clearance transfer has been a long time coming.

Both OPM and DoD have been preparing for the security clearance transfer for over a year, well before the President signed an executive order back in April, which made the move official.

But the Performance Accountability Council, which includes DoD and OPM, along with the Office of the Director of National Intelligence and the Office of Management and Budget, have been planning for the security clearance transfer since 2016, when Congress first instructed the Pentagon to develop a plan to perform its own security clearances.

“It’s much less painful, frankly, and organizationally more sound to keep the entire enterprise as one element and move it into the department than it would to pull about 75% out of it,” a defense official said. “It would have been less efficient.”

DoD’s Personnel Vetting Transformation Office, which the department stood up as a temporary organization designed to oversee and implement change management activities associated with the security clearance transfer, had mapped out about 80 major projects with 480 milestones and roughly 2,000 individual tasks needed to accomplish the security clearance transfer by Oct. 1.

Industry and defense organizations, along with Deloitte, KPMG and other contractors have counseled DoD on the merger and coming transition, a DoD official said.

Meanwhile, DoD’s undersecretary of defense for intelligence is searching for a permanent director to the DCSA, though it doesn’t have a timeline for anticipated personnel changes. Charlie Phalen, the now former NBIB director who was appointed to lead DCSA on an acting basis back in June, is expected to continue leading the agency on a temporary basis until a replacement has been named.

Beyond its plans to modernize the security clearance, the DCSA will also focus on modernizing supply chain security and protecting sensitive information earlier in the development process.

“A continuous review of how we do business has to happen, because we have not made changes in either of the two business areas over decades. This really is a chance to review and put in place what is a good starting point, but we have to look back and ask ourselves are we doing it right?” a DoD official said. “With critical technology protection, it’s a recognition that we need to focus on a risk-based system that looks at how a company and how a facility is protecting the information or the product that they are producing in this cleared environment.”

Monday, perhaps ironically, was also the third anniversary of the official launch of the NBIB, which has managed to cut its backlog of pending investigations roughly in half from a record high inventory of 725,000 last April.

A DoD official said the current inventory of background investigations sits at 302,000, a little more than 100,000 shy of DCSA’s goal to achieve a “steady state” of 200,000 cases by Jan. 1.

The administration recently informed Congress of its plans to move the administrative support functions for two OPM-led councils, the Chief Human Capital Officers Council and the Performance Accountability Council, to GSA, Margaret Weichert, acting OPM director and deputy director for management at the Office of Management and Budget, told reporters Tuesday afternoon.

It’s a relatively small change, as GSA already supports several governmentwide executive councils and organizations, such as the Chief Information Officers Council and the Chief Financial Officers Council.

The leadership of these organizations isn’t immediately changing either.

The CHCO Council executive director, for example, will continue to drive the agenda for the organization as an OPM employee. The membership of the Performance Accountability Council, which includes the Director of National Intelligence, the OPM and OMB directors, and OMB’s deputy director for management, will also stay the same.

Weichert, in her dual-hatted position, currently holds two of those positions on the PAC. The PAC itself sets suitability and security clearance standards for the federal government. The administration said it didn’t envision the actual membership of the PAC would change, unless OPM loses its role as the suitability and credentialing executive agent through the upcoming reorganization and GSA merger.

Still, the plan to move support for the CHCO Council and PAC is another attempt to accomplish the goals of the OPM-GSA merger without Congress.

The administration has in recent months taken other administrative actions to have GSA manage more OPM assets. OPM is already using GSA’s Centers of Excellence initiative as part of a concerted effort to modernize its legacy IT systems — and begin a series of inter-agency agreements and partnerships designed to advance the proposed OPM-GSA merger.

Meanwhile, a senior administration official said OPM has submitted a budget anomaly to OMB for consideration in fiscal 2020, which is designed to secure additional funds for the agency.

OPM faces a $70 million shortfall on Oct. 1 when the governmentwide security clearance portfolio transfers to the Pentagon. Additional funding would essentially keep the lights on at OPM and could prevent the agency from furloughing some employees, which was once considered an “impossible choice” if Congress failed to advance the GSA merger or pass full-year appropriations by the end of September.

The administration said it saw promising signs from Congress, especially in the Senate, that lawmakers understood the full scope of OPM’s challenges.

Status of other reorganization proposals

The OPM-GSA merger was one of 34 different proposals included in the administration’s government reorganization plan, which it published more than a year ago.

The proposals themselves covered a wide variety of agencies and ranged in scope and ambition. Of those original proposals, the administration said agencies could administratively implement, in part, 20 of them.

Congress has considered 10 of the proposals either through hearings, discussions with the administration or specific legislation, and 18 reorganization recommendations appeared in the President’s 2020 budget submission.

“The goal was not to do all of this reform all at once. That isn’t leading practice,” Weichert said. “You want to take it in steps. We wanted to show on the one-year anniversary… the progress that has been made to date, the areas in which we have made progress both legislatively and administratively and where we defined proposals that have been clarified in the 2020 budget that we believe need further involvement and legislative action.”

Though the administration clearly isn’t any closer to merging the Education and Labor Departments, for example, Weichert pointed to other areas where actions from Congress or the administration have already advanced pieces of the reorganization proposals.

The Better Utilization of Investments Leading to Development (BUILD) Act, which President Donald Trump signed into law last October, is designed to bring together capabilities of the Overseas Private Investment Corporation (OPIC) and the U.S. Agency for International Development’s Credit Authority as a consolidated development finance organization.

The law mirrors portions of the administration’s original reorganization proposal for OPIC and USAID. The new organization, the U.S. International Development Finance Corporation, could be operational as soon as Oct. 1 depending on appropriations.

Another one of the administration’s reorganization proposals is also well underway following an April executive order from the President, both OPM and the Defense Department are knee-deep in preparations to transfer the governmentwide security clearance program from the National Background Investigations Bureau to a newly renamed organization within the Pentagon.

The transfer itself will be effective Oct. 1, and both agencies are preparing to transfer OPM employees to DoD.

Other reorganization proposals that described broader goals for federal workforce have also seen progress, Weichert said.

Improving and strengthening the federal cybersecurity workforce, for example, was one of those broad reorganization goals. To that end, the administration sees promise with its Federal Cybersecurity Reskilling Academy, which graduated its first cohort of 30 employees earlier this month.

A second cohort began training this month, and OMB is planning to expand that program to larger groups of federal employees in the future after it saw high-demand from the workforce.

In the addition, the Government Effectiveness Advanced Research (GEAR) Center, should be operational by the fall, Weichert said.

The center will charge groups of experts from agencies, academia and industry to solve problems and tackle challenges outlined in the President’s Management Agenda.

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The workforce at the Office of Personnel Management’s National Background Investigations Bureau has received official offers this week to move to the Pentagon — where they’ll become employees of the newly renamed Defense Counterintelligence and Security Agency.

The offers were expected as the Trump administration continues its preparations to transfer the governmentwide security clearance portfolio, as well as the existing authorities, resources and personnel associated with that program, from OPM and NBIB to DoD.

All of NBIB’s 3,200 employees received two notices Monday, from one OPM and one from DoD, senior defense and administration officials told reporters.

The OPM letter provided official notice to employees that their positions will officially move to DoD. The second letter serves as a “welcome” from the Defense Department.

“With the transfer of their jobs, their grade does not change, their work space does not change [and] their supervisor does not change, except for a few executives,” a senior administration official told reporters Monday morning. “The pay stays the same. They are just in a different payroll system; that’s really the big change here.”

DoD is using a “transfer of function” authority to officially move NBIB’s existing workforce from OPM to the Pentagon. Under a “transfer of function” authority, employees generally have the right to move with their work to another organization if the alternative is a reduction in force or separation.

“That’s exactly what we’re doing, where a set of functions is transferring from one agency to another,” a defense official said. “That’s the legal vehicle for doing this. There comes with that a process of notification, which is what is happening today. In some cases, transfers of function come with other things like reductions in force (RIFs), which we’re not doing. Every single person will be offered the same identical job in the same identical space, just under a new personnel system.”

Currently, NBIB employees are classified under the title 5 personnel system. When they transfer to DoD, they’ll become title 10 employees under the Defense Civilian Intelligence Personnel System, which has a two-year probationary period, as well as different performance standards and pay bands compared to title 5.

NBIB employees must accept and sign off on the transfer before becoming a DoD employee. The move will become official Sept. 29, the first day of a new payroll period, the senior defense official said.

DoD’s Personnel Vetting Transformation Office, which the department stood up as a temporary organization designed to oversee and implement change management activities associated with the security clearance transfer, has mapped out about 100 major projects with 480 milestones and roughly 2,000 individual tasks needed to accomplish the security clearance transfer by Oct. 1.

Informing NBIB employees of the upcoming changes to their jobs is one of those administrative tasks, defense officials said.

Monday’s notices follow several moves defense officials made last month to rename the Defense Security Service as the Defense Counterintelligence and Security Agency and recognize the DCSA as the single governmentwide security clearance provider.

The department also appointed Charlie Phalen, the existing NBIB director, to serve concurrently as the acting DCSA director until the two agencies essentially merge on Oct. 1.

Security clearance “transition” and “transformation”

As defense and NBIB officials have said for months now, both OPM and DoD have been preparing for the security clearance transfer for over a year, well before the President signed an executive order back in April, which made the move official.

The DoD Personnel Vetting Transformation Office got its start back in January and has 16 full-time federal employees managing three phases of the upcoming security clearance move: transfer, transition and transformation.

In addition, the department last year signed a $9 million business transformation support contract with Deloitte, the defense official said. The official detailed the costs associated with the security clearance transfer, which were described as minimal.

DoD has asked for $200 million in the fiscal 2020 budget to stand up a working capital fund for the DCSA. OPM’s NBIB uses a revolving fund today to accept fees from its agency customers for the cost of performing a security clearance or issuing a credential.

A working capital fund would largely mirror the current NBIB fund. Much of NBIB’s existing revolving fund — about $800 million or so — will also move to DoD’s new working capital fund, the senior administration official said.

Once the transfer itself is complete, DoD will turn its attention to the “transition” and “transformation” phases of the project.

DoD’s Personnel Vetting Transformation Office will next focus on consolidating existing NBIB and Defense Security Service field offices across the country, a defense official said.

The continued development of the National Background Investigations Service (NBIS) is also a priority. NBIS, which will eventually serve as the DCSA’s end-to-end security clearance system, has several pilots underway.

In the meantime, DoD plans to reimburse OPM for the continued use of NBIB’s legacy security clearance case management system, which a defense official on Monday said will likely continue for the next two years, if not three.

But the beyond the administrative move of people, administration and defense officials see the upcoming security clearance transfer as an opportunity for existing personnel to learn new skills and gain potential career opportunities as part of a freshly organized, end-to-end security organization.

Many of the opportunities will come when the Trump administration launches more modern policies and continuous vetting procedures under the Trusted Workforce 2.0 initiative, which are expected later this year, the defense official said.

“We’ll make extensive use of automated, data-driven aggregation analysis skills-sets that really don’t fully exist in the current enterprise,” the official said. “If you’re a background investigator today, you have a series of tasks. Some rely on automation, but a heavy part of that job is travel and interviews. We’re not going to get rid of any of that. But the balance of activity is going to shift significantly more into the technology, data and analytics side. We see that as an opportunity.”

Administration officials also see the coming security clearance transfer as opportunity for federal investigators to broaden their scope and more freely transition from one security job to another. Security clearances and adjudications, as well as critical technology and supply chain protection, are all part of the DCSA mission.

“The continuum of a security organization is that all these parts, whether it’s trusting people, trusting work spaces [or] IT, they all are a continuum. They all play off against each other and they don’t exist in a vacuum. Organizationally, we have put them in a vacuum, but they do not exist in a vacuum,” the administration official said. “As a security officer, understanding the totality of all this makes your job a lot easier, and you are able to see nuances in this part of the business.”

Section 925 of the National Defense Authorization Act for fiscal 2018 authorized the move of the Office of Personnel Management’s National Background Investigations Bureau (NBIB) to the Defense Department and the Defense Security Service (DSS). The DoD Consolidated Adjudication Facility will also become part of DSS. An April 24 executive order mandated that the move be substantially completed this year.

NBIB will become part of the newly renamed Defense Counterintelligence and Security Agency (DCSA). One big change that has happened is the designation of NBIB Director Charles Phalen as the acting director of DCSA. That move most likely came as a surprise to staff of the former DSS. It is probably only the beginning of the surprises that NBIB and DSS staff have in store for them. In fact, this type of transition can be perilous, and how it is handled can make or break an organization. The Defense Department has had many successful examples of mergers of organizations during the years when the Base Realignment and Closure (BRAC) commissions were in place. They have also had their share of sloppy mergers that did not produce the promised results. My experience in the early years of BRAC taught me many lessons that made the later rounds go far more smoothly.

DoD is not alone in having a mixed track record on such moves. The private sector is routinely experiencing mergers and acquisitions (M&A) and has the same track record of mixed results. The good news is that there are some best practices that, if done properly, can go a long way toward ensuring a successful transition.

Communicate, then communicate some more

Staff in the gaining and losing organizations will talk about what is going on. In the absence of factual information from the organization’s leaders, the rumor mill will fill the gap with stories that may or may not be fact-based. The idea that you should communicate only when you have something new to say is one of the first failures we often see. The hunger for new information is so powerful that employees may suspend their skepticism long enough to believe just about anything they hear. A formal communications process, documented by a plan that everyone follows, is essential. Ad hoc communications will not be enough to battle the rumor mill.

Talent retention is crucial

Lack of information and the misinformation that tends to replace it can lead to one of the biggest M&A risks — the departure of critical talent. CAF, DSS and NBIB have key players whose loss could cause significant problems, such as loss of institutional memory and decreased productivity. Bleeding talent is one of the problems that can spiral out of control quickly. Both in government and the private sector, rank-and-file employees often follow the lead of the high performers in the organization. When the star players start bailing, the good players are often not far behind. If an agency does not monitor the situation and take proactive steps to retain their key players, they may find a talent hemorrhage starts that they cannot stop. In my own BRAC experience at the Defense Logistics Agency (DLA), we brought more than 20 organizations into the agency as a result of BRAC. The groups included mission units from the Army, Navy and Air Force, as well as new customers who wanted DLA to provide their HR services. We quickly learned that employee retention does not happen on its own. Agencies that fail to proactively reach out to key staff to reassure them will find themselves having too many going away parties and find the mission at risk.

Plan, check the plan, check again

Changes can overwhelm the team and make errors more likely. When a move involves changes in timekeeping and HR systems, the likelihood of errors increases. Add in the idea of moving from Title V to a completely different pay and personnel system and the risk escalates. The combination of big changes in the personal (pay, benefits, schedules, leave procedures, and other work rules) and the professional (mission changes, work practices and policies, etc) introduces countless opportunities to miss critical factors. The number of details that must be tracked to execute a change like this is mind-boggling. Organizations that do not have experience with transitions such as this have a high risk of overlooking critical details until it is too late to avoid the negative consequences of inadequate planning.

Culture is where risks and opportunities lie

The cultures of DSS, CAF and NBIB are most likely very different. My own experience in Defense and in civilian agencies taught me that there is a mindset in Defense Department that is very different from the civilian world. I spent 26 years in DoD, partly because I like the culture. In the civilian agencies, there is also a difference between central management agencies such as OPM and GSA, and those agencies whose missions are more expansive. At its worst, the clash of cultures can cause M&A failures, or cause expected benefits to never materialize. Failure to recognize how culture permeates employee thinking is a huge risk. The new DCSA will need the talent of DSS, the CAF and NBIB to succeed. If any of those groups perceive that they are not respected, or that their history is being dismissed, they are likely to start looking for the exits. Even if the staff does not leave, failure to build a new culture is likely to result in an underperforming agency that does not live up to its potential.

Ignore warning signs at your peril

When mergers are mandated by Congress or presidential orders, there is an increased tendency to overlook warning signs that things are not going well. The feeling is often that it has to happen anyway, so why worry about what you cannot control. That is a big mistake. OPM and DoD cannot stop this merger, but they control virtually every aspect of it. They can control how they educate and inform the workforce. They can control the level of detail they want in cataloging systems, policies and practices. They can control whether this is a move where one organization — NBIB — is simply plopped into another one, or it really is a merger that builds on the capabilities of everyone involved. And they can control the rigor of their planning and execution, which is likely to drive the ultimate success or failure of the merger.

The belief that one agency is the winner and one is the loser is common in mergers such as this. My experience in early BRAC rounds in DOD gave me firsthand experience with that when DLA took over some functions of the Navy’s Supply Centers. DLA came in with an imperious attitude that made the transition far more difficult than it should have been. Years later, when I was DLA’s HR Director and a former Navy Executive was our senior civilian in Logistics Operations, we made certain DLA did not repeat that mistake again.

The designation of NBIB’s director as acting director of DCSA makes it less likely that there will be a perception that DSS is a winner and NBIB and CAF are losers in this transition. Avoiding that perception and, even more critically, making certain it does not become a reality, is essential if these organizations are to successfully merge into cohesive team that can finally deal effectively with the background investigation issue, while continuing the vital DSS and CAF missions.

Jeff Neal is a senior vice president for ICF and founder of the blog, ChiefHRO.com. Before coming to ICF, Neal was the chief human capital officer at the Department of Homeland Security and the chief human resources officer at the Defense Logistics Agency.

The House on Tuesday began to consider the 2020 financial services and general government appropriations bill, which includes a provision that would block the administration’s proposed OPM-GSA merger. Instead, the bill would fund OPM at $43 million more in 2020 over previous years.

The appropriations bill itself doesn’t include the $50 million the administration requested to carry out the OPM-GSA merger.

Congressional debate began soon after members of the American Federation of Government Employees on Tuesday rallied in protest of the proposed OPM-GSA merger. They, along with members of the National Federation of Federal Employees, gathered outside the OPM building in northwest D.C.

The administration revealed last week it may need to furlough some 150 OPM employees if Congress refuses to move forward with the merger — and if members can’t pass full-year appropriations for 2020 by the end of this fiscal year.

Rep. Gerry Connolly (D-Va.), chairman of the Oversight and Reform Government Operations Subcommittee, has introduced an additional amendment to the 2020 appropriations bill that would prevent OPM from carrying out furloughs or reductions-in-force of its employees.

Connolly, in an interview with Federal News Network, described this latest amendment as one piece of a three-part effort to prevent the administration from advancing the OPM-GSA merger.

A briefing document given to congressional appropriators and authorizing staff about the OPM-GSA merger said the administration must consider all “impossible choices” if lawmakers don’t agree by June 30 to advance the proposal.

“This is all being rushed on the theory that if they proceed quickly, we will not be able to stop them,” D.C. Del. Eleanor Holmes Norton said of the merger at Tuesday’s rally.

Margaret Weichert, acting OPM director and deputy director for management at the Office of Management and Budget, told Federal News Network she didn’t want to furlough anyone. But OPM’s financial situation is forcing the administration to consider a series of “impossible choices.”

OPM will face a $70 million shortfall when the agency’s National Background Investigations Bureau and its security clearance business moves to the Pentagon Oct. 1.

“They do not have the statutory authority to do this,” Connolly said of the OPM-GSA merger at Tuesday’s rally. “We’re going to challenge them, if necessary, in a court of law.”

Both Connolly and Holmes Norton said they were surprised the administration continued to push the OPM-GSA merger after a May hearing on the proposal. When asked whether the administration seriously thought members of Congress could authorize the merger in a short few months, Weichert acknowledged the agency could use more time.

“What we ought to be doing is not trying to merge OPM with an agency with which it has no relationship in terms of objective, in terms of discipline [and] in terms of expertise that is needed,” House Majority Leader Steny Hoyer (D-Md.) said at Tuesday’s protest. “It makes no sense. It is irrational. The only conclusion that I can draw is that it is done again to denigrate and undermine federal employees and their rights and their benefits under the civil service system. That’s all that I can think of. One agency builds buildings. The other agency is supposed to build morale, not tear it down.”

Meanwhile, AFGE is soliciting signatures for a petition to block the OPM-GSA merger. Some union members expressed frustration with the administration’s rationale for the move.

“We write the policy,” said Marlo Bryant, chief steward for AFGE Local 32, which represents OPM employees. “We write the regulations. We pay your retirement benefits. We pay your health benefits. We do it all. We’re not just OPM HR. We process everything that you think we can’t.”

Other OPM employees said the uncertainty surrounding the agency and their jobs has been stressful. Donna Brockington, sergeant at arms for AFGE Local 32 and an OPM employee of more than 10 years, said she and her colleagues have been trying to figure out who could be furloughed.

“Now we have people actually filling out their retirement papers [and] their resignation papers and seeking other jobs at other agencies,” she said. “We’re losing systemic knowledge. We’ve been losing systemic knowledge that’s not documented for years now. This is not helping. If you want to know how my colleagues and I feel, we’re terrified.”

Though Brockington and other AFGE members said Weichert has encouraged the OPM workforce to bring their questions about the merger to her, they said they get the feeling the administration isn’t sharing all of the details with the employees.

“Margaret says a lot but she doesn’t know,” Bryant said. “Where is the data? Why haven’t employees been able to seen the data? Why hasn’t anyone in Congress been able to see the data? How can we just go on the word of one person when she’s not sharing any information?”

Beyond this week’s congressional debates over the OPM-GSA merger and 2020 funding for both agencies, the House Oversight and Reform Committee will host a hearing later this week on members’ requests for more documents and information from OPM, GSA and the FBI.

Democrats have asked for a list of documents, plans and details relating to the OPM-GSA merger. Members on both sides of the aisle expressed a desire to see more information about the plan and the administration’s rationale to split OPM functions to GSA and give OMB new authorities to expand a federal personnel policy office.

Connolly, along with committee Chairman Elijah Cummings and national security subcommittee Chairman Stephen Lynch (D-Mass.), on Monday asked for additional details about coming security clearance transfer.

Letters addressed to Weichert and acting Defense Secretary Mark Esper requested more details about the costs and personnel associated with the security clearance transfer and DoD’s plans to replace periodic reinvestigations with a continuous vetting program.

Not all members of Congress, however, are on board with House Democrats’ efforts to block the OPM-GSA merger.

Rep. Jason Smith (R-Mo.) introduced a series of amendments that would allow the merger to move forward while also cutting OPM’s funding.

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• Federal retirees could receive their largest cost of living increase in almost a decade. Rep. Eliot Engel (D-N.Y.) and Sen. Sheldon Whitehouse (D-R.I.) introduced companion bills to guarantee every senior a Social Security cost of living adjustment with an annual floor of no less than 3%. The bill would also update the formula that the government uses to determine the COLA, from the Consumer Price Index to the Consumer Price Index for the Elderly. This is the 10th year that Engel has introduced this bill. (Rep. Eliot Engel)

• Nearly all federal employees have received the 2019 retroactive pay raise. The Office of Personnel Management said less than 1% of federal employees have not gotten the retroactive raise yet. Many of those employees are at the IRS, but the agency said the last adjustments will be given out June 29. IRS told the National Treasury Employees Union it recently finished making manual updates needed to process retroactive payments. The last adjustments for IRS employees will be paid on June 29. (Federal News Network)

• Members of Congress are supposed to weigh in on the 2020 federal pay raise this week before the July Fourth recess. The House Rules Committee is marking up the 2020 financial services and general government appropriations bill. House appropriators have already cleared a 3.1% pay raise for civilian federal employees next year. The Senate hasn’t yet made its own pay proposal. (House Rules Committee)

• The Federal Retirement Thrift Investment Board will re-align its lifecycle funds near the end of 2020. The board approved a plan back in 2017 to start offering lifecycle funds in five-year increments as opposed to the current 10. The FRTIB said the change will reflect funds that more closely align with their participants’ anticipated retirement dates. The TSP currently offers L-2030, L-2040 and L-2050 funds. The funds next year will include L-2025, L-2035, L-2045 and similar options. (Federal News Network)

• Rep. Gerry Connolly (D-Va.) wants to give the governmentwide effort to modernize legacy technology a boost. He introduced an amendment to the fiscal 2020 Financial Services and General Government spending bill which would add $15 million to the Technology Modernization Fund. The House Appropriations Committee approved $35 million for the TMF. Connolly’s amendment would push the IT loan program to $50 million, which is still well below the administration request of $150 million. The full House is expected to vote on the bill later today. (House Rules Committee)

• There hasn’t been a permanent director of the Government Publishing Office in two years, and it doesn’t look like one will be appointed anytime soon. The White House withdrew the nomination of House Administration Committee staff member Robert Tapella. He served as the head of GPO under the George W. Bush and Obama administrations. President Donald Trump submitted Tapella’s nomination last June, but the Senate never scheduled a confirmation hearing. (White House)

• With Army Secretary Mark Esper also serving as acting defense secretary, the Army is rearranging positions to fill his role. Army Undersecretary Ryan McCarthy will assume additional responsibilities as a senior official performing the duties of the Army secretary. Additionally, Army General Counsel Jim McPherson will take on the responsibilities of the service undersecretary.

• The Defense Department renamed its security clearance agency as part of an overall take over of the background investigation process. The Defense Security Service is now the Defense Counterintelligence and Security Agency or DCSA. The agency will be headed by Acting Director Charlie Phalen starting July 1. The new agency will take over the National Background Investigations Bureau on October 1. A senior DoD official said DCSA plans to bring the security clearance backlog down to 300,000 by the end of fiscal 2020. The backlog currently stands at about 400,000. (Federal News Network)

• Less than a year out from the 2020 population count, the Census Bureau’s cloud-based IT systems remain vulnerable. The Commerce Department’s Office of Inspector General has found in the rush to get everything ready for a test in April 2018, the bureau failed to secure the most privileged user accounts for each of its cloud environments. The IG office said the vulnerability stems from bureau officials rushing to have everything ready for an end-to-end test in April 2018. The Census Bureau has agreed with the IG’s recommendations, and said it has a fix in place for its cloud vulnerabilities. (Oversight.gov)

• It’s official, agencies are now cloud smart, not cloud first. Application rationalization takes center stage in the final cloud smart strategy the Office of Management and Budget released yesterday. It is the one major change since OMB issued the draft document nine months ago. OMB told agencies that rationalizing the number of applications will let them more easily improve service delivery and save money. Overall, cloud smart continues to focus on three pillars to move IT modernization forward: Security, procurement and the workforce. Federal CIO Suzette Kent said the strategy tries to address historic barriers to moving to the cloud and incorporates the entire CXO community to adopt these services. (White House)

• Despite a grim financial forecast for the Postal Service, it didn’t meet its goal to limit overtime hours for employees. The agency’s Office of Inspector General said USPS spent more than  $1 billion on overtime in fiscal 2018. That’s $358 million above its target for the year. Postmaster General Megan Brennan recently told Congress the Postal Service will run of cash by 2024 without legislation to shape its business model. (U.S. Postal Service Office of Inspector General)

• The Harriet Tubman $20 bill may yet see the light of day. The Treasury Department inspector general promised to look into why and how the roll out of a new twenty still isn’t scheduled. Treasury originally planned to release the bill, bearing a picture of abolitionist Harriet Tubman, next year, to coincide with passage of the 19th Amendment, which gave women the right to vote. Treasury Secretary Steve Mnuchin said the Tubman bill was delayed while Treasury redesigns the $10 and $50 bills for better security. (Associated Press)

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This story was updated on June 25, 2019 at 4:00 p.m. to reflect additional information from DoD senior officials. 

The Defense Department’s security clearance agency officially has a new name — and new acting leadership.

The Defense Counterintelligence and Security Agency — formerly the Defense Security Service — will be led by acting Director Charlie Phalen, currently director of the National Background Investigations Bureau, the NBIB confirmed to Federal News Network.

The DCSA will subsume NBIB and will serve as the governmentwide security clearance provider. Phalen’s appointment begins July 1 and he will lead both NBIB and the DCSA until the two agencies merge by Oct. 1.

“Mr. Phalen has the full support and confidence of the acting Secretary of Defense, the
acting director of the Office of Personnel Management and myself,” Joseph Kernan, undersecretary of defense for intelligence, wrote Monday in a memo to Defense Security Service and NBIB employees. “His current position, background and experience in both government and industry make him well qualified to serve as the acting director of DCSA. He will provide the steady leadership, continuity, and depth of knowledge necessary to successfully transfer the background investigation mission to DoD and to integrate the workforces into a cohesive team.”

Patrick Shanahan, in one of his last acts as acting Defense secretary, made the name change official in a June 20 memo.

Kernan said the new name reflects both the DSS and NBIB’s missions.

“We are at a key moment in time and have a unique opportunity ahead of us, as we bring together the missions and workforces of NBIB and DSS,” he wrote. “Foreign threats to our personnel, technology, information and facilities are pervasive and growing. They demand that we elevate our focus on security, modernize our processes and capabilities and better integrate our efforts to allow trusted people and technology in, while keeping adversaries out. This combined team is well positioned to
bring greater focus and alignment to U.S. government-wide efforts to strengthen our trusted
workforce, mitigate supply chain threats, protect sensitive information, and bolster
counterintelligence capabilities.”

Monday’s announcement comes as the Trump administration officially recognized DoD as having primary responsibility for security clearances across much of government.

A long-awaited executive order, which President Donald Trump signed back in April, made this move official and set two major timelines. It gave both DoD and OPM until June 24 to finalize the details of the security clearance transfer and sign an agreement that codifies how NBIB and OPM authorities, resources and personnel will move to the Pentagon’s newly rebranded security clearance agency.

The transfer itself won’t be final until Oct. 1, the start of the new fiscal year.

Kernan, as the undersecretary of defense for intelligence, will oversee the DCSA and the transfer of governmentwide security clearance portfolio from OPM to DoD. In addition, the undersecretary will oversee the development of updated security vetting procedures and strengthen the DCSA’s abilities to protect technology within the defense industrial base, according to Shanahan’s June 20 memo.

Kernan’s organization will, of course, also be responsible for the backlog of pending security clearances, which sits at roughly 410,000 today.

The DCSA hopes to further whittle the security clearance inventory to 300,000 by the end of this fiscal year, a senior DoD official told reporters Monday at a briefing at the Pentagon.

Moving nearly all of the pieces needed to investigate and adjudicate a security clearance under one roof will shorten the process, the DoD official said.

“Once we execute the transfer, all of the elements of the investigative system —from submission to investigation to adjudication to record keeping — will all be under a single agency for 95% of the entire number of cases in the government,” the official said.

That goal, at least based on NBIB’s progress to date, may seem conservative. NBIB has slashed the security clearance inventory by some 300,000 cases within the past year. The agency has achieved that progress through a variety of business process improvements, new technology and more personnel, Phalen told Federal News Network last week.

DCSA is also fielding and modernizing its own IT system, which will add capabilities that are not available now.

The DoD official said there is an IT transition plan in place and DCSA will accept a certain amount of redundancy in the IT systems it uses for the first couple of years until the technology transition is complete.

DoD and OPM are also making plans to “buy back” NBIB’s current legacy case management system. The Trump administration, in a briefing document given to lawmakers in recent weeks, estimated DoD reimbursements would total $42 million.

The DCSA director will “program and budget for the emerging resource requirements necessary for the successful reorganization of the DSS to the DSCA and is authorized from fiscal year 2019 to fiscal year 2021 to increase civilian manpower, acquire facility space and enter contractual agreements within the agency’s budget authority,” the June 20 memo reads.

Dan Payne, the current director of the Defense Security Service, will retire in the coming months, Kernan said. Phalen’s appointment as acting DCSA director gives both DSS and NBIB, which will continue their efforts to merge as one entity, some consistency as they prepare for the security clearance transfer by Oct. 1.

NBIB employees themselves will be transferred to DoD by or on Sept. 29 under the transfer of authority statue.

“This also provides us the preamble to start fresh, to shape an integrated, responsive organization, and to foster a culture that reflects the best of both NBIB and DSS,” Kernan said.

Scott Maucione contributed to this report. 

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The security clearance backlog, once at a historically high peak of 725,000 in April 2018, is now at its lowest point in three-to-four years.

The investigative inventory jumped from roughly 328,000 in late 2015 to 573,000 cases the next year, according to Performance.gov data. From there, it kept climbing.

But a new embrace of technology and a concerted effort to hire more investigators has, within a little more than a year, helped slash a once perilously high backlog into one that’s much more manageable.

Today, the inventory sits at 424,000 pending investigative cases, which NBIB Director Charlie Phalen said extends across all case types for both government and industry.

NBIB, which is preparing to transfer its employees and contracts, as well as the security clearance backlog itself to the Defense Department by Oct. 1, sees a healthy goal of 200,000 pending cases as within reach.

In an interview with Federal News Network, Phalen said investigators are closing more cases each week than they were a year ago, despite a weekly intake that’s roughly 6,000 cases higher this year compared to 2018.

Still, he acknowledged NBIB isn’t yet meeting congressionally-mandated timelines to initiate, investigate and adjudicate new security clearances and credentialing cases within 74 to 195 days.

“We’re seeing the median time decrease significantly, down as much as 40% for one case type,” Phalen said. “That’s a good leading indicator. Our work management unit, which is a place where cases would sit until they’re being processed, is way down. It’s probably down 60-to-70% right now. In some cases it’s down to almost zero in some regions.”

Phalen has attributed the progress on the security clearance backlog to several factors. NBIB hired more investigators — about 2,000 more federal and contractor employees in fiscal 2018.

“That workforce on both universes has become better skilled and more mature as time goes on, so their productivity gets better,” Phalen said. “We’ve [also] talked about being able to use them more efficiently.

NBIB set up “hubs” in specific locations with high concentrations of clearance holders. The goal, Phalen said, is to bring security clearance cases to NBIB agents, instead of vice versa. The agency has learned how to parse out the fieldwork associated with one case to multiple agents, he said. Previously, one agent handled one case.

“There are certain areas in the country where there’s a whole lot of work where we find this to be very, very helpful — southern California for the military, places along the space coast in Florida and in the Midwest for industry,” Phalen said.

In addition, the agency is beginning to embrace new technology that’s helping NBIB investigators perform their work more efficiently. NBIB, for example, has several pilots ongoing that use robotic process automation to collect additional information to inform their casework.

The agency is also starting to feel more comfortable with technology that’s more widely used in industry and other agencies, such secure video teleconferencing.

“I’ve been in the security business a long time; we’re scared to death of telephones and VTCs and that kind of stuff,” Phalen said. “It took a little while to get over that, but we are over that. What this has done is really improve access to get information resolved. It has improved our ability to reach out to places that are harder to get otherwise.”

NBIB began to use VTC to reach clearance holders and applicants who lived in war zones, where agency investigators can’t easily travel.

“Using this kind of technology to be able to reach out in a very rudimentary fashion really gave us the idea that this is something we can really leverage and expand on this,” Phalen said. “We’ve actually set up virtual hubs with investigators sitting at locations who are able to reach out within an agency or a company to their infrastructure.”

Though the embrace of secure video teleconferencing to collect information needed for a background investigation may seem trivial, it’s a significant change for the intelligence and security community, which largely hasn’t updated or modernized the clearance process in several decades.

Further updates to the security clearance process are coming under Trusted Workforce 2.0, the Trump administration’s initiative to modernize and rethink the way it initiates “trust” with employees, contractors and others and grants them access to certain government information.

DoD and OPM preparing for security clearance transfer

Both NBIB and the Defense Security Service are continuing preparations to transfer the entire governmentwide security clearance portfolio from the Office of Personnel Management to the Pentagon. Both agencies have been planning for the transfer for months, even before President Donald Trump signed an executive order in April making the move official.

The EO instructs OPM to transfer all resources, authorities and employees associated with the security clearance program to DoD by Oct. 1.

“We’ve been working really collaboratively between OPM and the Department of Defense and others that are involved here too, to make sure as this thing transitions, we do not create problems that don’t exist today and we can continue the momentum both in terms of how we deal with the inventory and how we are bringing this Trusted Workforce 2.0 piece into it,” Phalen said.

Both NBIB and DSS will merge into a new DoD entity called the Defense Counterintelligence and Security Agency (DCSA).

To prepare for the move, Phalen has been communicating weekly through email and in-person meetings with the NBIB workforce. Employees also have an internal website where they can submit their questions about the transfer.

“We’ve pretty much locked in the things that people are most concerned about. Do I still have a job? Yes, everybody has a job. [Are] payroll … leave … benefits going to be affected? The answer is generally no. The pay and everything stays as it is. We have to keep communicating though.”

Most NBIB employees, at least for now, will continue to work out of their existing buildings. Most employees work out of one of two facilities in either Fort Meade, Maryland, or Boyers, Pennsylvania, and those investigators will stay there.

NBIB’s “headquarters” at OPM’s building in northwest Washington, D.C., will also remain, Phalen said.

“Over time we will look for opportunities to … merge these organizations from a real estate standpoint, but there’s no immediate need to do that on day one because we have leases on these facilities,” he said.

The security clearance transfer also gives NBIB investigators an opportunity to learn new skills and potentially move into different roles, Phalen said.

DSS today helps cleared industrial providers oversee and protect classified information and technology. Phalen sees the potential for longtime NBIB investigators to use their existing skillset to help industry secure their systems or assist agencies with insider threat programs.

“Somebody today that is doing investigations understands what security is about from that sense of [who] is a trusted person,” he said. “Taking that background and putting it into this kind of outreach to industry and being able to talk to folks in industry about what their population looks like, what’s happening in their facilities [and] how they’re secured, gives that employee an opportunity to broaden their knowledge base of the business.”

The defense training activity and NBIB’s investigation training facility have “been joined at the hip” since both agencies began discussing the security clearance transfer, Phalen added. Together, both training activities have been discussing how the new DCSA can cultivate a “new security officer of the future.”

Meanwhile, DoD is standing up a working capital fund that will mirror NBIB’s existing revolving fund. The Pentagon will continue to use OPM’s legacy case management system to process security clearances while the department builds out the National Background Investigations Service. NBIS will one day serve as DoD’s end-to-end security clearance IT system.

In the interim, DoD will reimburse OPM for the use of the legacy system at roughly the same rate as NBIB currently pays to use it today, Phalen said.

“The actual number is still in negotiation, but the costs won’t go up because of this transfer, nor do they magically disappear because of the transfer,” he said.

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Defense officials said Tuesday that they had awarded a $75 million other transaction agreement to build major components of the IT system that will eventually handle all background investigations and security clearance adjudications for federal employees and contractors.

The award went to a team of vendors led by Perspecta, the same large government contractor that won a separate $49 million OTA last year to build another portion of the National Background Investigation System (NBIS).

The new agreement is specifically meant to build the security architecture and data services for NBIS. Officials decided it was needed after lessons learned from the first OTA, which focused primarily on building investigation management tools.

“We’ve had pieces of the NBIS application running at other DoD agency data centers and being built by other partners, independent of this common enterprise architecture,” said Terry Carpenter, the program executive officer for NBIS. “What we’re figuring out is by building out a common data broker, we can get an even greater efficiency. This is a federal-wide service that has to be up 365 days a year, 24 by seven. And to assure that type of robustness, we really wanted to make sure we were taking advantage of the cloud architecture to make sure that the application has those kinds of properties: Self-healing, self-aware, can expand with the demand. And all of those pieces are in this new OTA.”

DISA and the Defense Security Service, which will take ownership of the system next year, intend to host at least the unclassified portion in Amazon Web Services’ GovCloud.

Officials said they believed the cloud-based approach would help NBIS adapt over time as new security clearance policies, including the government’s move toward continuous evaluation, are implemented. And eventually, funneling data from various government data systems into a common cloud structure will let DSS apply emerging artificial intelligence and machine learning technologies to help speed the clearance process.

“Everybody is looking at how we apply machine learning to reduce the labor and amount of time it takes to find anomalies in data sets that are hard to see,” Carpenter said. “There’s a pretty deliberate process to separate the research work from the production system and to look at different techniques, different data elements of interest that will allow us to try to do something that would reduce the amount of labor it takes for people to adjudicate. If some percentage are really easy, clean cases, why are we spending so much time having people go through the entire file to figure that out? Spend your human capital on the hard cases.”

DoD still needs OPM legacy systems beyond October

The new OTA spans the next two years, but officials said they were not certain exactly when it would yield a working system that could begin to process clearances.

In budget documents, the Defense Department has already indicated it will need to continue using the Office of Personnel Management’s legacy IT systems even after it assumes responsibility for governmentwide security clearances in October. But Carpenter said at least some elements of the older OPM systems will likely need to stay up-and-running for several more years.

The existing case management system — the one that was the target of two devastating cyber exfiltrations in 2015 — will most likely stay in use until fiscal year 2022 as DSS gradually implements portions of NBIS and shuts down corresponding elements of the old OPM architecture.

“We know there’s a legacy system that needs to be turned off. Everybody’s familiar with what happened there, so we’re very sensitive to the pressures of getting this done, but we’re also sensitive to doing it right,” Carpenter said. “But we really feel very confident in the approach and the capabilities that we’re getting from our industry partners to do this right and to do it really well.”

DISA and DSS said they were using the OTA approach instead of a traditional contract vehicle partly because of speed, and partly because it encouraged nontraditional vendors to contribute their technologies to NBIS. Besides Perspecta, the contracting team includes five smaller companies, including three who have never done business with the government.

The section of federal law the agencies are leaning on to justify the OTA requires that nontraditional vendors perform a “significant” amount of the work.

“It’s ‘significant’ because of the nontraditional defense contractors and the technology stack and the subject matter expertise that they’re bringing in,” said Chandler Grice, the program and acquisitions chief for NBIS. “They’re critical enabling pieces to the entire solution architecture. Without those, we wouldn’t be able to go build a prototype solution.”

Second OTA expected for ‘production’

Officials said they expected to eventually award another OTA to move NBIS into a “production” state assuming the system proves itself during the period of the current OTA, which is technically classified as a prototype project. The law allows the government to make such an award without conducting a new competition, so the same industry team would be the likely recipient.

And asked whether it was appropriate in the first place to use an acquisition authority that Congress created for prototypes — when the government has clear requirements, a timeline, and a clear intent to use the system as its long-term solution for security clearances — they defended the decision to follow the OTA route.

“We’re talking about an enterprise-level software factory, a continuous authority to operate and a secure cloud environment. Those three things alone, there are very few programs in the department that have done it, and there are even fewer that had done it with the government as the lead integrator,” Carpenter said. “It meets the definition of a prototype not only because of the commercial technology that’s being brought to bear, but because how we’re doing it is extremely different. And there’s a lot of opportunity here to really learn how we do this better across more programs than just NBIS.”

Matthew Palmer, another senior NBIS acquisition official, said the government’s role as the system integrator is a major key to how DSS will update the technology infrastructure over time, including by incorporating the government’s transition from point-in-time background investigations to a framework of continuous evaluation for an individual’s suitability to hold a clearance.

“All of this is modular so that as industry improves and new technology improves, we can do individual tech refreshes on pieces of the application without having to revamp and do a whole new recompete like you would with a traditional vendor, where the software system would age, become noncompliant or outdated,” he said. “It won’t be a gargantuan process to revamp it again over a period of years. We’ll be able [to] revamp it internally so it’s always kept up to date.”

It’s one of several reasons the Trump administration is giving for its proposed reorganization of OPM, the details of which are scheduled for more intense scrutiny at a hearing next Tuesday before the House Oversight and Reform Government Operations Subcommittee.

The administration is planning to send a legislative proposal for the OPM reorg to Congress in the coming days. The proposal will detail a legislative transfer of OPM’s existing authorities to a new “service” or “entity” that will perform the kind of personnel policy the agency performs today, but within the General Services Administration.

It already released a “case for change,” which the administration also provided to the press Tuesday, to good government groups and lawmakers. Part of the administration’s “case for change” addresses the financial consequences that OPM will face if the agency continues to exist in its current form without the background investigations business.

The security clearance transfer, which the President official with a recent executive order, “will dramatically undercut OPM’s ability to operate and maintain the systems that support the federal civilian workforce, greatly increasing the risk of another failure on a scale as large as or larger than the data breach,” the administration wrote.

NBIB and the governmentwide security clearance business generate $1.3 billion, or 80% percent of OPM’s revolving fund, in revenue for the agency. Without that revenue, OPM won’t have enough funding — at least $70 million annually — to successfully continue the agency’s other functions, which include health and retirement services and personnel and workforce policy development.

OPM itself quietly warned of the consequences it would face when Congress considered transferring the defense security clearance business to the Pentagon back in November 2017, as Federal News Network first reported. But those concerns were never publicly raised, and Congress moved forward with transfer. Now, the entire security clearance business will move to DoD by Oct. 1, and the financial consequences are greater.

“I am hopeful, if not optimistic, that Congress will engage with us on finding solutions here,” Margaret Weichert, OPM’s acting director and the deputy director for management at the Office of Management and Budget, told reporters Tuesday. “Because at the end of the day, we can’t fail to deliver here. The choices we’d be left with,  if we don’t have the synergies with GSA on things like overhead … [and] shared services, what’s going to get squeezed are the missions that people care a lot about.”

Those missions, which handle policy on the Senior Executive Service, employee recognition, performance management and other topics, would be a skeleton of what they are today. The IT systems that support those activities would function, but at a bare minimum, Weichert said.

In other words, OPM has few other options but reorganization, according to the administration.

“The greatest risk we have here is doing nothing,” Weichert said. “I have been very vocal in saying that while this proposal may not be perfect, it’s the one on the table.”

Weichert said she’s asked members of Congress and good government groups to develop alternatives to the OPM reorganization proposal and ideas to address the agency’s IT, financial and operational challenges and mission shortfalls.

“I’m disappointed to say I haven’t heard other ideas,” she said. “I am open to them.”

OPM does receive annual appropriations, about $265 million, from Congress. Weichert dismissed the idea that Congress could simply appropriate more funding to modernize OPM’s IT systems.

“The challenge that we have is … the way IT has been structured at OPM,” she said. “Only about $100 [milllion] of the $450 million of the annual IT spend is directly under the centralized control of the CIO. Most of the spend is represented in contracts that are directly leveraged by the program offices and [are] very hard to manage in an integrated fashion. We don’t have a fundamental shared services IT model that many, including those who instituted the FITARA scorecard, believe is the path forward.”

GSA, by contrast, has that structure, Weichert said.

According to the administration’s case for change, the OPM reorganization is expected to realize $11-$37 million in cost savings a year. Weichert said most of those cost savings would come through consolidating contracts and facilities.

“We don’t anticipate leaving this building,” Weichert said of OPM’s headquarters in Washington. “We do believe that there are different space allocations within this building that should free space for others in government to utilize, thereby lowering our overall overhead.”

Strategic, operational and IT challenges hinder OPM mission

Beyond OPM’s current financial challenges, Weichert said IT and operational issues also exist, which she’s become more attuned to since becoming the agency’s acting director last October.

OPM’s IT challenges, particularly the agency’s response to the 2015 data breaches and a backlog of pending security clearances, have been well-documented. NBIB, however, has made significant progress in whittling down an inventory that reached a record-high of 725,000 investigative matters in April 2017. The inventory now sits at roughly 459,000, according to NBIB Director Charlie Phalen.

But the administration’s case for change also references legacy IT systems that date back to the 1980s. OPM itself has made multiple attempts to shorten and improve the process for handling federal retirement claims.

“Throwing more money at the problem doesn’t fundamentally fix how we get after creating shared services support structures and moves to leading practices around case management and around high-tough, continuous improvement,” Weichert said of OPM’s antiquated systems. “[Those] are all things that GSA has experience and proven capabilities in moving toward.”

Those IT challenges have distracted OPM from performing what civil service reformers perhaps once envisioned when they formed the agency back in 1978 — a central personnel entity that oversees all federal employees.

OPM and its employees today are focused more on administering Title 5, Weichert said. The agency doesn’t have universal authority over policies that govern, for example, Title 10 or Title 30 employees, and they don’t have the ability to predict and chart a path forward for a more modern workforce.

“What’s the workforce of the 21st century need to look like? There is no one in OPM today who is able to do that for all of government,” Weichert said.

Instead, agencies have developed their own alternative systems in search for a way out from the constraints of a decades-old personnel system, she said.  Weichert envisions a future where a centralized human capital office manages personnel authorities for all employees across government, but OPM as it’s structured today can’t handle additional workload, she said.

“Frankly today, OPM can’t take on anything else, because we have operational backlogs,” Weichert added. “We have IT challenges. We have real challenges doing what we’re tasked with today. Ultimately, it would make sense to have a more unified approach to all of government from a delivery standpoint, but we’re not there yet.”

Most of OPM’s existing functions would transfer to GSA if the Trump administration gets its way. The reorg proposal also suggests adding three additional people to OMB’s existing Office of Performance and Policy. The office would be modeled after OMB’s Office of Federal Procurement Policy.

Situating this office within the Executive Office of the President would elevate the federal human capital management mission, Weichert said.

Administration pursuing other options for reorganization

Under the upcoming legislative proposal, the administration will ask for the authority to lift and shift OPM’s current employees to GSA.

Weichert said all OPM employees who work on personnel policy today will move to GSA under another “service,’ similar to the organization of the Federal Acquisition Service, for example.

OPM’s existing employees who handle health for 8 million beneficiaries and retirement services for some 5 million annuitants would also likely move to this new “service” under GSA.

“We fundamentally believe that the people of OPM have done absolutely the best they can in a structure that is not well-aligned to the 21st century demands,” Weichert said. “This isn’t a matter of people failing to do a good job. They have done the best with a structure that is outmoded.”

But the administration is also considering other avenues to pursue OPM reorganization.

The administration will explore using inter-agency agreements to hire GSA to support OPM’s existing IT capabilities, Weichert said.

In addition, the administration is reviewing whether it can delegate specific activities to GSA, Weichert said. GSA could, for example, manage OPM’s existing headquarters in downtown Washington, D.C.

Finally, the administration is considering whether it can use Title 40 authorities within the U.S. Code as the legal authority to move OPM’s IT systems to GSA. A section in Title 40 allows the Office of Management and Budget to review and take action if it believes an agency isn’t managing its IT properly. Outsourcing OPM activities and better leveraging both agencies’ fee-for-service operations are also possibilities, Weichert said.

The administration reiterated it doesn’t envision OPM employees would lose their jobs during the reorganization, though Weichert acknowledged attrition may be natural.

She said she’s spoken with federal employee groups and the American Federation of Government Employees, which has a bargaining unit at OPM.

The administration needs to keep employee groups informed, Weichert said, so it can continue to build trust with the federal workforce and build an appetite for broader, more ambitious civil service changes.

“We need to be pro-employee throughout [this] change, or we will not get another at-bat,” she said. “When we say we are not looking to downsize the workforce through these changes, we mean it. That gives us the right to continue to find solutions to these systemic structural problems.”

Yet AFGE on Tuesday reiterated its opposition to the proposed OPM reorganization.

“This administration is clearly following a ‘ready, shoot, aim’ strategy built on misleading everyone about its motivations,” AFGE National President J. David Cox said in a statement. “Congress must prevent this reckless move in order to protection OPM the institution from this irresponsible plan.”