Establishment of OPM

The creation of the Office of Personnel Management (OPM) may be traced to the enactment of the Civil Service Act of 1883, known as the Pendleton Act,¹ which established in statute some underlying aspects of today's federal personnel system. Prior to the Pendleton Act, according to OPM's description of the system before 1883, "[f]ederal employment was largely based on political affiliation or personal connections, a system known as the 'spoils system,' rather than applicants' knowledge, skills, and abilities."² The Pendleton Act and the resulting merit system, OPM says, "ushered in a new era and created a competitive civil service, which emphasized an applicant's relative level of qualifications for the position being sought, after fair and open competition."³ The act established the Civil Service Commission, which was intended to insulate the hiring and management of federal employees from partisan political influence.⁴ The commission continued with much the same role until the enactment of the Civil Service Reform Act of 1978 (CSRA), which created OPM.⁵ The CSRA authorized significant leadership roles in federal human resources management and personnel policy for OPM.⁶ By consolidating human resources leadership within OPM, Congress intended for the agency "to concentrate on planning and administering an effective government-wide program of personnel management."⁷

Statutory Authority

Generally, the statutory provisions governing OPM are located in Title 5 of the United States Code and, in particular, in Chapter 11. Section 1103(a) of Title 5 vests the OPM director with fulfilling various functions, including "executing, administering, and enforcing (A) the civil service rules and regulations … and the laws governing the civil service; and (B) the other activities of the Office including retirement and classification activities; except with respect to functions for which the Merit Systems Protection Board or the Special Counsel is primarily responsible."⁸

In addition, the OPM director is responsible for "aiding the President … in preparing such civil service rules as the President prescribes, and otherwise advising the President on actions which may be taken to promote an efficient civil service and a systematic application of the merit system principles, including recommending policies relating to the selection, promotion, transfer, performance, pay, conditions of service, tenure, and separation of employees."⁹

Under Section 1103(a), the director's responsibilities also include, among others, securing accuracy, uniformity, and justice in OPM's functions; appointing individuals to be employed; directing and supervising employees; distributing business among employees and organizational units; directing internal management; and directing the preparation of requests for appropriations and the use and expenditure of funds.¹⁰

The agency's website explains that "the Office of the Director provides guidance, leadership and direction necessary to fulfill the agency's mission and make the Federal Government the model employer in the United States."¹¹

Section 1303 of P.L. 107-296, enacted on November 25, 2002, established the Chief Human Capital Officers Council. The council members include the OPM director, the deputy director for management of the Office of Management and Budget, and the chief human capital officers from 27 departments and agencies.¹² The OPM director acts as chairperson of the council, which is required to "meet periodically to advise and coordinate the activities of the agencies of its members on such matters as modernization of human resources systems, improved quality of human resources information, and legislation affecting human resources operations and organizations."¹³

Mission, Key Functions, and Organization

As the federal government's central personnel agency, OPM has responsibilities related to human capital management, administration of federal employee benefit programs, and vetting of job candidates. The agency describes itself as follows on its website:

OPM serves as the chief human resources agency and personnel policy manager for the Federal Government. OPM provides human resources leadership and support to Federal agencies and helps the Federal workforce achieve their aspirations as they serve the American people. OPM directs human resources and employee management services, administers retirement benefits, manages healthcare and insurance programs, oversees merit-based and inclusive hiring into the civil service, and provides a secure employment process.¹⁴

In recent years, OPM has included a mission statement and a list of core values in its strategic plans. For example, the agency's A New Day for Federal Service: Strategic Plan 2010-2015 mission statement was "Recruit, Retain and Honor a World-Class Workforce to Serve the American People."¹⁵ OPM listed several values in the plan, including service, respect, integrity, diversity, enthusiasm, excellence, and innovation.¹⁶ The mission statement and values remained unchanged in the Strategic Plan 2014-2018.¹⁷

Most recently, OPM Strategic Plan Fiscal Years 2018-2022 revised the mission statement to read, "We lead and serve the Federal Government in enterprise human resources management by delivering policies and services to achieve a trusted effective civilian workforce." In addition, the core values included innovation, integrity, excellence, service, and leadership.¹⁸ The plan stated that OPM "works in several broad categories to lead and serve the Federal Government in enterprise human resource management by delivering policies and services to achieve a trusted effective civilian workforce."¹⁹

The strategic plan also identified "key functions" that are central to the work of the agency, including the following:

Human Capital Management. OPM provides policy direction and leadership in designing, developing, and promulgating Government-wide human resources systems, programs, and policies that support the current and emerging needs of Federal agencies. In addition, OPM provides technical support and guidance to agencies regarding the full range of human resources (HR) management policies and practices.²⁰

Benefits. OPM offers the availability of quality benefits for Federal employees and their families. The agency works to facilitate access to the high-caliber healthcare and insurance programs offered by the Federal Government, including health insurance services, dental and vision benefits, flexible spending accounts, life insurance; and long-term care insurance programs. OPM manages insurance benefits for more than eight million Federal employees, retirees, and their families. OPM also develops and administers programs that provide health insurance to uninsured Americans through Affordable Insurance Exchanges, and employees of tribes or tribal organizations. OPM is responsible for the administration of the Federal Retirement Program covering more than 2.7 million active employees, including the United States Postal Service, and nearly 2.6 million annuitants, survivors, and family members.²¹

Vetting. As the Suitability and Credential Executive Agent, OPM's Director is responsible for prescribing suitability, fitness, and credentialing standards for employment; prescribing position designation requirements with respect to risk to the integrity and efficiency of the service; prescribing applicable investigative standards, policies, and procedures for suitability, fitness, and credentialing; prescribing reciprocity standards; and making suitability determinations and taking actions.… The OPM Director as the Suitability Executive Agent, issued National Training Standards for Suitability Adjudicators to support uniformity in the continued professional development of the suitability workforce and to promote reciprocal recognition of suitability determinations.²²

To support OPM's key functions, the agency is organized into program divisions, including (1) Employee Services; (2) Retirement Services; (3) Healthcare and Insurance; (4) Merit System Accountability and Compliance; (5) Suitability Executive Agent; and (6) Human Resources Solutions.²³ Figure 1 shows the organization chart for OPM, as obtained from OPM's Annual Performance Report Fiscal Year 2020.

Figure 1. Organization Chart for OPM (January 2021)

Source: OPM, Annual Performance Report Fiscal Year 2020, January 2021, p. 12, https://www.opm.gov/about-us/budget-performance/performance/2020-annual-performance-report.pdf.

OPM's Operating Budget

OPM's activities are funded from multiple sources. Specifically, OPM receives several sources of discretionary funds to support its program and leadership activities.²⁴ OPM also manages certain mandatory appropriations and related trust funds for federal employee benefits.²⁵ Several statutory provisions authorize OPM to make certain trust fund transfers to cover OPM's costs for administering these programs. Some of the more prominent sources of funding for OPM's administrative activities—which OPM refers to as its "operating budget"—include the following:²⁶

• The Salaries and Expenses appropriations account funds many of the core operations of OPM.²⁷ The functions and objectives of the agency's major components are funded by this account, including employee services, merit system accountability and compliance, retirement services program, and healthcare and insurance.²⁸
• The Office of the Inspector General (OIG) appropriations account funds OIG efforts to "protect the integrity of OPM's programs and operations. The OPM OIG's audits, investigations, evaluations, and administrative sanctions programs serve to prevent and detect fraud, waste, abuse, and mismanagement."²⁹
• Transfers from OPM-managed trust funds partially pay for some of OPM's activities. The agency is responsible for administering the civil service retirement and insurance programs. The trust fund transfers partially fund Retirement Services, Healthcare and Insurance, Planning and Policy Analysis, Office of the Chief Information Officer, and Office of the Chief Financial Officer operations.³⁰
• The Revolving Fund is "comprised of fees or reimbursements provided by agencies for services OPM provides for activities covered by the Fund."³¹ Services funded by the Revolving Fund include "background investigations, human resources services as well as related tools and technologies, such as USAJOBS."³²

OPM's annual congressional budget justification typically includes detailed information about all of the components of OPM's operating budget. Table 1, below, provides more detailed information from OPM's FY2022 budget justification.

For FY2021, OPM's operating budget—including discretionary appropriations, mandatory administrative authorities, revolving fund activities, advance and reimbursements, and OIG discretionary appropriations—was $1,051,715,493, and the agency had 2,737.9 full-time-equivalent employees.³³ OPM also received $12,100,000 from P.L. 116-136, the Coronavirus Aid, Relief, and Economic Security Act, enacted on March 27, 2020.³⁴ This funding was to be used for "improvements in remote work capacity."³⁵

Performance

The Government Performance and Results Act requires most agencies to set goals, measure performance, and report the information to Congress for potential use.³⁶ OPM provides this information in multiyear strategic plans, annual plans, and annual reports.³⁷ OPM explained that its strategic plan for FY2018-FY2022 was intended to "guide the Agency's efforts to lead and serve the Federal Government in enterprise human resources management by delivering policies and services to achieve a trusted effective civilian workforce."³⁸ This strategic plan highlighted four primary agency goals and established a series of objectives and sub-objectives associated with each goal. OPM's Annual Performance Report (APR) "provides an overview of OPM's progress in implementing the strategies and achieving the objectives and goals in its FY 2018-FY 2022 Strategic Plan."³⁹ These primary goals were identified in 2018 and assessed in 2021 as follows:

• Goal 1: Transform hiring, pay, and benefits across the federal government to attract and retain the best civilian work force.⁴⁰ OPM's FY2020 APR found that the agency met three out of four objectives associated with Goal 1 by the time the report was published.⁴¹
• Goal 2: Lead the establishment and modernization of human capital information technology and data management systems and solutions.⁴² OPM's FY2020 APR found that the agency met one out of three objectives associated with Goal 2.⁴³
• Goal 3: Improve integration and communication of OPM services to federal agencies to meet emerging needs.⁴⁴ OPM's FY2020 APR found that the agency met four out of five objectives and sub-objectives associated with Goal 3.⁴⁵
• Goal 4: Optimize agency performance.⁴⁶ OPM's FY2020 APR found that the agency met three out of 10 objectives and sub-objectives associated with Goal 4 by the time the report was published.⁴⁷

Issues for Congressional Oversight

Issues related to potential politicization of the civil service and reorganization and modernization of OPM may be of interest to Congress for oversight purposes. Additionally, in 2021, the National Academy of Public Administration (NAPA) released a statutorily required report recommending a number of objectives for OPM to implement.⁴⁸

Selected Oversight Issues

Some observers have expressed concerns about potential politicization of the civil service by employees "burrowing in"—that is, the process of political appointees being converted to civil service positions during a presidential transition.⁴⁹ This practice is of interest because "[u]nlike political appointments, civil service positions do not terminate at the end of an administration. Conversion therefore allows political appointees to stay in government after the president who appointed them has left office."⁵⁰ Observers suggest that this practice may not align with merit system principles that were intended to prevent nepotism and political favoritism in the civil service.⁵¹

OPM is statutorily tasked with overseeing the conversion of political appointees into civil service positions.⁵² In 2018, OPM issued a memorandum outlining changes to their oversight practices in response to P.L. 114-136, the Edward "Ted" Kaufman and Michael Leavitt Presidential Transitions Improvements Act of 2015, enacted on March 18, 2016.⁵³ Agencies are required to "submit a request to OPM whenever they seek to hire a current political appointee or one who has served in a political position within the last five years." In addition, "OPM conducts multi-level reviews of each application to make sure the conversion follows federal hiring guidelines."⁵⁴ A report published in 2017 by the Government Accountability Office found that

OPM approved 78 of 99 requests to convert political appointees to career positions agencies proposed to complete from January 1, 2010, through March 17, 2016. OPM denied 21 requests for varying reasons, such as bypassing qualified veterans, and referred 9 denied cases to the Office of Special Counsel (OSC). Of the 78 approved requests, agencies followed through and converted 69 political appointees to career positions. During the period, agencies completed 7 conversions without obtaining OPM approval; OPM completed post-appointment reviews for 4 of these 7 conversions, denying all 4. For each of the 4 denied cases, the agencies undertook various remedies, such as re-advertising positions, in response to OPM's concerns. OPM did not complete a review for the 3 other conversions because the appointees were no longer in the career positions to which they were converted.⁵⁵

Congress may consider several questions with regard to "burrowing in," including the adequacy and transparency of OPM's current oversight practices and the role of federal agencies in evaluating political appointee conversions.

Another possible issue for congressional oversight relates to the potential reorganization of OPM. The Trump Administration proposed to merge OPM with a renamed Government Services Agency (GSA; currently the General Services Administration).⁵⁶ This plan would have transferred most of OPM's functions and authorities to GSA.⁵⁷ It also suggested establishing an Office of Federal Workforce Policy in the Office of Management and Budget (OMB) to assume OPM's policy responsibilities.⁵⁸ Former OMB director Russell Vought wrote a letter to House Speaker Nancy Pelosi about the merger plan that stated:

The primary purpose of the legislative proposal is to authorize the transfer of the vast majority of the current functions and resources of OPM to GSA, including Human Resources Solutions, Information Technology, Retirement, Health and Insurance Services. GSA will create a new Personnel Service to house the human resources and employee lifecycle management shared service offerings. Agencies will benefit from GSA helping them to obtain more strategic and comprehensive support for their needs.⁵⁹

Subsequent hearings conducted by the Senate Committee on Homeland Security and Governmental Affairs and the House Committee on Oversight and Reform received testimony that expressed process and policy concerns about the Administration's proposal.⁶⁰

Further, Congress acted with legislation in response. In particular, Section 1112 of P.L. 116-92, the National Defense Authorization Act for FY2020,⁶¹ required an independent study and report from NAPA to include

a comprehensive assessment and analysis of—(A) the statutory mandates assigned to the Office of Personnel Management and the challenges associated with the Office's execution of those mandates; (B) the non-statutory functions, responsibilities, authorities, services, systems, and programs performed or executed by the Office of Personnel Management; the Office's justification for carrying out such functions, responsibilities, authorities, services, systems, and programs; and the challenges associated with the Office's execution of same; (C) the means, options, and recommended courses of action for addressing the challenges identified pursuant to subparagraphs (A) and (B), including an analysis of the benefits, costs, and feasibility of each option and the effect of each on labor-management agreements; (D) a timetable for the implementation of options and recommended courses of action identified pursuant to subparagraph (C); (E) statutory or regulatory changes necessary to execute any course of action recommended; (F) the methods for involving, engaging with, and receiving input from other Federal agencies, departments, and entities potentially affected by any change in the structure, functions, responsibilities, authorities of the Office of Personnel Management that may be recommended; (G) the views of identified stakeholders, including other Federal agencies, departments, and entities; non-Federal entities or organizations representing customers or intended beneficiaries of Office of Personnel Management functions, services, systems, or programs; and such individual customers and intended beneficiaries; and (H) such other matters as the Director may prescribe.⁶²

The statute also provides that not later than 180 days after the NAPA report is submitted to the OPM director and the congressional committees, the OPM director—in consultation with GSA, OMB, and other appropriate federal agencies, departments, or entities—shall submit a report to the congressional committees. The report is to include OPM's views on the findings and recommendations of the NAPA report "together with any recommendations for changes in the structure, functions, responsibilities, and authorities" of OPM. In addition, the provision states, "Any recommendation submitted in the report … for change shall be accompanied by a business case analysis setting forth the operational efficiencies and cost savings (in both the short and long-terms) associated with such change, and a proposal for legislative or administrative action required to effect the change proposed."⁶³

The law further provides, "No person may assign, transfer, transition, merge, or consolidate any function, responsibility, authority, service, system, or program that is assigned in law to the Office of Personnel Management to or with the General Services Administration, the Office of Management and Budget, or the Executive Office of the President, until on or after the date that is 180 days after the date on which the report required" from OPM is submitted to the House and Senate Committees on Appropriations, the Senate Committee on Homeland Security and Governmental Affairs, and the House Committee on Oversight and Reform "and subject to the enactment of any legislation required."⁶⁴

Ultimately, the Trump Administration reportedly decided to abandon the plan.⁶⁵ Such a proposal may, however, cause some to raise questions regarding OPM's role in federal human resources management, including whether OPM's organizational structure should be altered, whether OPM should continue to be the primary agency tasked with significant responsibilities related to human capital management, and OMB's role (if any) in federal personnel policy.

Still another issue for congressional oversight relates to modernization of OPM and federal hiring practices. Some observers suggest that OPM should modernize its hiring practices to stay competitive with private sector employers. Executive Order (E.O.) 13932, "Modernizing and Reforming the Assessment and Hiring of Federal Job Candidates,"⁶⁶ issued by President Donald Trump on June 26, 2020, sought to alter the federal hiring process by removing potentially unnecessary education qualifications to ensure that the federal hiring process is merit-based.⁶⁷ The changes mandated by the E.O. were reportedly intended to "most especially help with positions in the emerging technologies field, where some agencies have struggled to fill positions."⁶⁸ A recent U.S. Merit Systems Protection Board study found that agencies are relying more often on direct hire authorities to compete for talent.⁶⁹ According to the report "agencies used direct hire authorities to make 28,000 appointments in fiscal 2018."⁷⁰ In reviewing this issue, Congress may consider whether OPM should encourage agencies to continue using direct hire authorities, how OPM has implemented E.O.13932, the E.O.'s effect on the federal workforce, and whether a reduced reliance on education requirements in federal hiring would allow the federal government to better compete with the private sector for talent.

NAPA Recommendations for OPM

On March 17, 2021, NAPA released a congressionally mandated report on OPM, which included 23 recommendations for the agency.⁷¹ The first recommendation in the report stated that OPM's statutory authority (codified at Title 5, Section 1101, of the U.S. Code) should be amended "to clarify and redefine the role and mission of OPM as the federal government's enterprise wide, independent human capital agency and steward of the merit system for all civilian personnel systems and employees, responsible for providing government-wide leadership in strategic human capital management."⁷² Another recommendation stated that OPM should "(1) redefine the OPM mission statement and restructure the organization to effectively and efficiently execute the reframed mission priorities and (2) restore the agency's reputation for human capital leadership, expertise, and service by redirecting the internal culture and rebuilding internal staff capacity."⁷³

NAPA included a number of objectives associated with each recommendation. Each recommendation, if implemented, is designed to yield specific intended outcomes. The report explains:

Successful implementation should yield the following results: Human capital is recognized and supported as a strategic priority across government by the Administration, the Congress, and federal agencies. OPM's role is reaffirmed and strengthened as the leader for strategic human capital management government-wide. OPM's approach to human capital management evolves from predominantly compliance-oriented to customer-focused, value-added, data-driven and forward-looking encouraging innovation and sharing of best practices.⁷⁴

In a press conference about the report, the president of NAPA, Terry Gerton, said, "We strongly recommend that a central personnel agency continue to exist, and that organization is an independent, enterprise-wide human capital agency and a steward of the merit system principles."⁷⁵ In the statute requiring the NAPA report, Congress gave OPM six months to provide a formal response.⁷⁶ As of the time of this writing, OPM has not yet submitted its response to Congress. The NAPA report and the upcoming OPM response may present an array of issues for continued congressional consideration regarding OPM.