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REVISION OF MAJOR FEDERAL STATUTORY SALARY

SYSTEMS

THURSDAY, MAY 10, 1962

HOUSE OF REPRESENTATIVES,
COMMITTEE ON Post OFFICE AND CIVIL SERVICE,

Washington, D.C. The committee met, pursuant to notice, at 10 a.m., in room 215, House Office Building, Washington, D.C., Hon. James H. Morrison (acting chairman) presiding.

Mr. MORRISON. The committee will come to order, please. Today we shall resume hearings on legislation pending before the House Post Office and Civil Service Committee to provide pay increases for postal and other Federal employees.

This morning it is our pleasure to hear from two more distinguished officials of the executive branch of our Government,

the Deputy Secretary of Defense, Hon. Roswell Gilpatric, and Hon. Najeeb Halaby, Administrator of the Federal Aviation Agency.

We shall first hear from the Deputy Secretary of Defense, and I want to mention at this time that Secretary Gilpatric must leave the city by noon and in order for him to catch his plane he will have to excuse the Secretary at approximately 11 o'clock.

So, Mr. Secretary, will you proceed? STATEMENT OF HON. ROSWELL L. GILPATRIC, DEPUTY SECRETARY

OF DEFENSE

Mr. GILPATRIC. Thank you, Mr. Chairman.

May I introduce to the committee my associates, Dr. Harold Brown, the Director of Defense Research and Engineering, on my right, and on my left, Mr. Thomas Morris, the Assistant Secretary of Defense for Installations and Logistics. Mr. Morris and Dr. Brown will be available for questioning if there is time. They have statements which they would like at least to put in the record because they have more to do with the problem before the committee today than any other officials in our Department.

Mr. Gross. Mr. Chairman, one question before the gentleman starts. It is a rather substantial statement in length. Mr. Gilpatric, if you read your entire statement there will be no opportunity to ask any questions if you are leaving shortly after 11 o'clock.

Mr. MORRISON. We have two witnesses to hear from today. I am sure after Secretary Gilpatric submits his statement and I will leave it up to him as to how much he wishes to cover of his statement, and we hear from Mr. Halaby, if you do not have an opportunity to have

your questions answered by their assistants, if you wish we will request that the Secretary come back for questioning.

Will you proceed, Mr. Secretary?

Mr. ĞILPATRIC. Mr. Chairman and members of the committee, I appreciate the opportunity to appear before you today in support of the President's proposal for the reform of the Federal pay system. I consider this a particularly important appearance because it gives me a chance to emphasize an obvious truth which is nevertheless too often forgotten: no matter how powerful our weapons, how brilliantly conceived our strategy and tactics, the defense effort depends ultimately on people—people in adequate numbers and, most importantly, people of ability, experience, and judgment.

As Under Secretary of the Air Force a decade ago, and now as Deputy Secretary of Defense, I have been personally exposed to the Defense Department's problems in getting and keeping people of the quality we require to fulfill our mission. As the managing partner for some years in a large law firm engaged in corporate practice, I know from personal experience how intensely the business community, as well as the legal profession, competes for talent. The plain truth is that, in terms of pay incentives and flexibility of personnel policy, the Federal Government is no longer in the same ball park with industry and the professions.

This would be a bad situation if the question were only the efficient use of the taxpayer's dollar. It is a dangerous situation when our national survival is involved. We are in a deadly competition with an enemy who has made substantial and sometimes spectacular progress in the military field. In large part this progress results from the fact that the Soviets channel their best manpower into their military effort. This is done partly by the stick and partly by the carrot-that is, partly by government fiat and partly by a system of monetary and other rewards which lead the most talented Soviet citizens to aspire to such jobs. We in this country, who believe in freedom of choice, will not take up the stick. But we certainly should not and, indeed, cannot afford to turn Federal service into a secondclass profession by failing to pay our people what they are worth.

As you well know, Defense is by far the largest single employer in the Government and, indeed, in the United States and the free world. Of its approximately 3,900,000 employees, about 1,060,000 are civilians, a number nearly double the total personnel of General Motors Corp. These employees represent about 45 percent of the full-time civilian workers of the Federal Government. They are divided into two major segments: 544,000 trades and crafts employees, and 516,000 salaried personnel.

As you know, the proposed legislation is not concerned with trades and crafts employees. The pay of these workers is set by wage boards based on wage rates for similar jobs in the pertinent locality. Thus, the principle of reasonable comparability with prevailing remuneration in the private sector of the economy is already in force as far as these workers are concerned.

This is not true, however, with respect to salaried personnel of the Department, almost all of whom fall under the Classification Act, all except about 500 or 600 under Public Law 13. While these civilians are specialists in skills found throughout our economy, both our experience at Defense and the Bureau of Labor Statistics survey indicate that their financial rewards are far from comparable to those of private industry, particularly in the intermediate and upper grades. This is despite the fact that they are direct participants in the business of defending our country against communism, the most insidious enemy we have ever faced.

The studies which have been conducted over the past decade—both those concerned with the civilian employees of the Government as a whole, and those concerned specifically with Defense Department civilian personnel-have warned that the existing compensation system is not sufficiently responsive to competitive pressures; that it has neither an adequate salary range from the bottom to the top of the pay structure, nor sufficient flexibility within the structure, to insure the attraction and maintenance of the necessary employee quality.

The latest detailed study with respect to Defense civilian personnel was that made in 1957 by the so-called Cordiner committee. That study found that more than 99 percent of civil service employees of the Department in pay grades GS-7 and above were scientists, engineers, managers, professional men, or highly skilled technicians in their direct support. It further found that the Department was suffering serious losses among its top-quality career civilians, and that in the recruitment of college graduates both quantity and quality were inadequate.

I think I will skip the quotations from the report because I am sure this committee is familiar with them. They will be in the record.

It may never be possible to attain strict comparability of governmental and nongovernmental pay at all levels of the Federal pay structure. I personally do not believe that would be desirable or necessary. Our position is not that there should be an absolute equivalent between Government pay and pay in the private sector. Few of us, either you or we in the executive branch, would be here today if it were not for some other motivating factor, of course, than pay. Nevertheless, in my judgment, it is absolutely essential that whatever financial sacrifices are required of Federal employees be kept within realistic limits and that flexibility be available to permit financial rewards to be tailored to performance.

The amendments to the Classification Act since the Cordiner report have resulted in some across-the-board pay increases—a 10-percent increase in 1958, I believe, and a 71/2-percent increase in 1960-and some increase in the flexibility of salary administration. Thanks to this committee, we did get some more supergrade positions last year which I think we have effectively utilized in the Department. But these improvements have not been nearly enough to achieve reasonable comparability.

Indeed, the situation in the Department of Defense today is more critical than that which the Cordiner committee reported. New management programs and the increasing complexity of weapons and communications systems development have imposed increased demands for highly skilled people. At the same time, mechanization of clerical functions is decreasing the number of less skilled employees required. Electronic data computing and data processing machines and other new types of business equipment have decreased the numbers of less skilled employees required. The net result is a continuing increase

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in the proportion of civil servants in the upper grades. In short, our need for quality performance is rapidly expanding in just the areas where pay is increasingly noncompetitive with private industry.

The proposal before you is of quite a different character from those of past years. Mr. McNamara and myself, personally, have gone into this at great length. We believe it would be a major step in resolving our present difficulties. It would raise pay levels progressively so as to approach comparability. It would relieve the compression between top and bottom salaries. And it would greatly enhance flexibility by adjusting step increases to provide incentives over a longer period of time, by authorizing the appointment of individuals with extra qualifications at a rate above the minimum of a grade, by assuring a differential between a supervisor and those he supervises, and by removing existing numerical limitations on GS-16, 17, and 18 positions. The Department of Defense wholeheartedly supports this legislation as an important part of the national defense effort.

Dr. Harold Brown, Director of Defense Research and Engineering, and Assistant Secretary Morris will give you some examples of our difficulties under the present pay structure in both the scientific and nonscientific fields. As I said, they have under their jurisdiction in the Office of the Secretary of Defense two of the most key groups of employees who make it possible for us to manage this great establishment that we are charged with, and therefore they have personal knowledge of the difficulties that we have encountered in attracting and holding the kind of people that they need and we need.

Now to the examples which are in their statements I would like to add a few of my own. In doing so, I recognize that examples and statistics do not necessarily constitute definitive proof, one way or another, with respect to the need for salary reform. For instance, the overall gross statistics on turnover in civilian personnel of the Department do not, as such, presently indicate an overall deterioration in the personnel situation.

I am not here today to say that we are in desperate straits by any means. Our turnover rate is averaging about 17 percent, which I understand is not high for a Government agency, and on the whole we have excellent people, wonderful people in the Defense Department. Nothing struck me more in coming back into public life, as I have three times in my career, than to see the caliber of people we have on the payroll of the Federal Government at all times in uniform and out of uniform.

What we are concerned with is a selective situation. A relatively few thousand out of 500,000 are the ones we are concerned about. We are also concerned about providing the opportunities for men within the Department to aspire to these higher positions.

So as I say, the situation is serious in key areas, but it is not an across-the-board situation that need greatly concern this committee or the Congress or the people of the United States as a whole. We are well staffed and we have able people in the Defense Department.

The examples that I am going to give you merely corroborate the conclusions to which anyone who looked at this problem would, I think, be driven by commonsense.

Industry, as I know from my experience in working with it as a counselor for industrial concerns, is very shrewd in selecting talent and, given the present degree of imbalance between the level and

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