Issue Briefs

The administration says its government reorganization plan would improve services to federal employees by moving retirement and insurance services from OPM to GSA. “Centralizing human resources operational functions in a single entity within the newly renamed Government Services Agency would integrate the transactional and employee-centric, service-based functions currently performed by OPM with existing GSA operations, including federal employee payroll and travel. With end-to-end services around the federal employee lifecycle maintained in one place, considerable operational efficiencies should be attained. Currently, these services are stove-piped, forcing burdensome processes on managers and employees,” it says.

Following is an excerpt from the Organizational Alignment Priorities included in the Administration’s government reorganization plan: Delivering Government Solutions in the 21st Century Reform Plan and Reorganization Recommendations:
Source: https://www.whitehouse.gov/wp-content/uploads/2018/06/Government-Reform-and-Reorg-Plan.pdf

*Reorganizing the U.S. Office of Personnel Management U.S. Office of Personnel Management

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Summary of Proposal: This proposal would reorganize the U.S. Office of Personnel Management (OPM) and the process by which Federal personnel management and operations functions are coordinated.

Specifically, the proposal would move OPM’s policy function into the Executive Office of the President (EOP) and elevate its core strategic mission, while devolving certain operational activities, including the delivery of various fee-for-service human resources and IT services, to other Federal entities better positioned to provide transaction processing services that meet 21st Century needs.

Transfer of Operational Functions to a Renamed Government Services Agency

OPM’s current human resources service delivery and implementation functions would be transferred. A strong nexus would be retained, however, between these operational activities and the personnel management office to be housed in the EOP, which would be responsible for ensuring that human resources IT operations and services evolve in a manner consistent with changes in workforce policy.

Centralizing human resources operational functions in a single entity within the newly renamed Government Services Agency would integrate the transactional and employee-centric, service-based functions currently performed by OPM with existing GSA operations, including Federal employee payroll and travel. With end-to-end services around the Federal employee lifecycle maintained in one place, considerable operational efficiencies should be attained. Currently, these services are stove-piped, forcing burdensome processes on managers and employees. It is worth noting that HR services are rated last among all mission support services by Federal managers.

To achieve the vision outlined in this proposal, the consolidated service agency would house those functions currently performed by OPM’s Human Resources Solutions, and Healthcare & Insurance organizational units. It could also potentially carry out OPM’s responsibilities for retirement processing and servicing, but other entities, such as the Department of the Treasury, would also be considered. As also discussed in this Volume, activities currently performed by the National Background Investigations Bureau would be consolidated with similar activities mandated to the Department of Defense.

Additional Analysis and Background

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More than 80 percent of OPM’s funding and staff is dedicated to meeting the Agency’s service-based responsibilities. These include important functions, such as administering the Federal Employees Health Benefits Program for more than 8.2 million active Federal employees, retirees, and their families; administering the Civil Service Retirement System and the Federal Employees Retirement System for over 5.3 million active Federal employees, annuitants, and survivors; processing more than two million background investigations each year for over 100 Federal agencies; and managing USAJOBS, which receives over 85 million searches each month from 15 million site visitors. While these functions are vital, their scope and scale are such that they necessarily distract agency leadership’s attention from strategic human capital management and stewardship of an efficient civil service structure. OPM’s greatest visibility in recent years has stemmed from high profile challenges within these operational and service-based activities.

In 2014, a data breach into OPM’s systems exposed personally identifiable information for over 20 million individuals, including Federal employees and their families, job applicants, and contractors, creating one of the biggest national security threats in decades and requiring the Federal Government to pay for credit monitoring for 10 years. In 2007, OPM issued a stop work order marking its fourth consecutive failure to automate its retirement processing function. Since then, OPM has not attempted this effort again, and instead relies on manual reviews. From 2014 to today, OPM has increased prices on background investigations by more than 40 percent, and the timeline for processing background investigations has tripled, further straining agency budgets and the ability to fill critical positions. Currently, OPM is working to reduce an inventory that has grown to approximately 725,000 cases.

There is no significant benefit obtained from having these operational fee-based functions housed within the same agency that oversees the overarching policies. Further, it is in no way apparent that OPM has a comparative advantage relative to other Federal entities in the management of information technology or contractual services. Also, in selling human resources and IT products to those agencies whose personnel practices it monitors, OPM is in a position that can lend the appearance of a conflict of interest.

Achieving the End-State Vision

Achieving this vision may entail both legislation and administrative actions to transfer and/or delegate certain basic OPM functions, resources, and authorities. This includes moving peripheral functions to other agencies, and moving core policy units into the EOP. There would also be a change-management and capacity-building process, led by the Director of the Office of Management and Budget and the Director of OPM, to transform and elevate the organization. Fully and effectively achieving the end-state vision presented here would necessarily require a partnership with the Congress, including the granting of statutory authorities as necessary.