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Witness Testimony of Hon. Neil A.G. McPhie, U.S. Merit Systems Protection Board, Chairman

I am delighted to accept the invitation from Chairwoman Herseth Sandlin, Ranking Member Boozman, and Members of the Subcommittee for the opportunity to share the views of the Merit Systems Protection Board (MSPB) regarding the application of veterans’ preference in federal employment policies and practices.  The Subcommittee has asked me to address the following questions:

1.  How many cases involving veterans’ preference were brought before MSPB and what were the rulings in those cases?

2.  How many were of merit?

3.  What are the most common complaints you received from veterans’ regarding hiring through veterans preference?

4.  What is your opinion on agencies’ adherence to veterans’ preference?

I will first provide a brief overview of MSPB’s structure and operations followed by responses to the Subcommittee’s inquiries.

BACKGROUND

The Merit Systems Protection Board (MSPB) is an independent quasi-judicial agency established to protect Federal merit systems and the rights of individuals within those systems. The MSPB carries out its statutory missions by adjudicating certain employee appeals and conducting studies of the Federal civil service and other merit systems in the Executive Branch to determine whether they are free from prohibited personnel practices. 

I am honored to serve as the 7th Chairman of the Merit Systems Protection Board.  The Merit Systems Protection Board has three members, appointed by the President with Senate confirmation, who serve staggered 7-year terms.  Individual appeals are initially filed in one of MSPB’s 6 regional or 2 field offices, where an administrative judge considers evidence from the parties and renders an initial decision.  Either party can seek review of that decision before the full Board.  The MSPB receives about 7,000 appeals in its regional and field offices each year, and in about 20% of those cases, one of the parties files a petition for review before the 3-Member Board.

Veterans’ preference in federal employment has existed in some form since the Civil War era.  The Veterans’ Preference Act of 1944 consolidated the various veterans’ preference rules found in prior statutes, regulations, and executive orders.  This Act remains the primary source of veterans’ preference rights to this day.  Veterans’ preference rules apply in two major areas: reductions in force (RIFs) and hiring.

THE MERIT SYSTEMS PROTECTION BOARD’S VETERANS’ PREFERENCE CASELOAD

Since its creation in 1978, MSPB has had the authority to resolve veterans’ preference issues in the RIF context as part of its general jurisdiction over RIF appeals.  The last time that the Board was called on to decide significant questions involving the application of veterans’ preference in RIFs was in the early 1990s, when hundreds of veterans filed MSPB appeals challenging how they were treated in a nationwide reorganization of the Postal Service.  Based on the cases I have seen since joining MSPB in 2003, there does not appear to be much confusion over how veterans’ preference operates in RIFs, and in fact MSPB has not received large numbers of RIF appeals in recent years.

Veterans’ preference in hiring is another matter.  Until 1998, MSPB did not have authority to decide claims for violation of veterans’ preference rules in hiring.  That year, Congress enacted the Veterans Employment Opportunities Act (VEOA), which granted MSPB authority to decide appeals brought by preference eligibles and certain other veterans who allege a violation of their employment rights.  The Veterans  Preference Act and the Pendleton Act together require that when a preference eligible has applied for a position in the competitive service, the agency may make an appointment only after conducting a competitive examination with application of veterans’ preference, unless the agency chooses to fill the position under a non-competitive appointing authority created by statute or regulation.  Since 1998 MSPB has received approximately 1,600 VEOA appeals in its regional and field offices, the vast majority of which contained allegations that the appellant’s nonselection constituted a violation of veterans’ preference rules.  The most common claims that MSPB sees in VEOA appeals are that the hiring agency:

  • Failed to conduct a competitive examination with rating, ranking, and veterans’ preference points;

  • Failed to correctly apply veterans’ preference rules in a competitive examination;

  • Failed to provide veterans’ preference in a promotion action;

  • Denied a veteran the right to compete for a vacancy; and/or

  • Improperly cancelled a vacancy announcement.

Some of these claims are resolved under what are now well-established legal principles.  For example, veterans’ preference rules do not apply to promotion from among a pool of internal candidates, nor do veterans’ preference rules prohibit cancellation of a vacancy announcement after applications are received.  Cancellation of a vacancy announcement when a veteran appears at the top of a certificate of eligibles is sometimes cited as evidence of discrimination against veterans, and MSPB has authority to decide such a claim under the Uniformed Services Employment and Reemployment Rights Act.  The result in such a case depends on the strength of the evidence and the particular facts of the case.

Likewise, whether an agency violated rules governing veterans’ preference in a competitive examination is decided on a case-by-case basis.  For example, in 2005, MSPB determined that some appointments under the Outstanding Scholar Program violated the rights of preference-eligible veterans.

The Homeland Security Act of 2002 authorized government-wide use of "category rating" as an alternative to traditional competitive examinations with rating and ranking and addition of veterans' preference points.  Category rating is a flexibility that agencies may, but are not required, to use.  So far, the Board has not seen a large number of VEOA appeals challenging how veterans' preference is applied in the category rating context.

The Merit Systems Protection Board’s Office of Policy and Evaluation conducts studies of the Federal civil service, and has gathered some noteworthy information concerning the employment of veterans by the federal government.  We have recently conducted two studies that provide some information related to veteran’s perceptions of the hiring process.  The first was a study focusing on entry-level hiring, while the second looked at upper-level hiring. 

We found that in FY 2005, 18% of the new hires in full-time, permanent professional and administrative positions at the GS-5, -7, -9 levels were veterans.  The rate of hiring of veterans for all entry-level positions, which includes technical and blue-collar occupations, was 21.5%.  In higher level positions (grades 12 through 15), 42% of all new hires in FY 2005 were veterans, a 12% increase from the level of veteran hiring in FY 2001.  About 55% of veterans hired for upper-level positions in FY 2005 were appointed under authority of the VEOA, which requires agencies to allow veterans to compete for vacancies that would otherwise have been closed to non-status outside candidates. 

The use of VEOA as a hiring authority has increased steadily since its enactment.  In FY 2000, 520 veterans were hired under VEOA to fill these upper level positions; by FY 2005, the number had grown to 3,132.  During FY 2005, DoD and its components made 86 percent of all VEOA selections; while the Department of Homeland Security, the Department of Energy, the Veterans Administration and the General Services Administration accounted for another 10 percent.

During the course of responding to the 2005 survey questions a few of the respondents articulated the following concerns with the Federal hiring process: 

  • Military experience was not given enough credit when agencies set starting pay;

  • Agencies did not award appropriate credit for military experience when determining a veteran’s accrual rate of annual leave;

  • Military organizations did not adequately equip military personnel transitioning to civilian life with the skills needed to prepare resumes;

  • The process was too long; and

  • The process was too complex.

MERIT OF VETERANS’ PREFERENCE APPEALS

You asked for the number of veterans preference appeals “that are of merit.”  Because there has been no compelling need in the past to maintain adequate statistics regarding veterans’ preference cases, MSPB has not maintained statistics on the number of decisions that are rendered in favor of the appellant in veterans preference appeals.  Similarly, MSPB has not maintained statistics on the specific percentage of VEOA appeals that are resolved through settlement agreements.  However, we can say that more than half of all appeals that are within the MSPB’s jurisdiction and filed on time are settled, with no MSPB decision on the merits.  If Congress would like for MSPB to maintain this data in the future, we would be happy to work with Subcommittee members and staff to provide such information.

ADHERENCE TO VETERANS’ PREFERENCE REQUIREMENTS BY OTHER FEDERAL AGENCIES

Finally, you asked for my opinion regarding the adherence of other Federal agencies to veterans’ preference requirements.  The MSPB has not conducted any studies that systematically address the issue of agencies’ adherence to veterans’ preference.  For this reason, we have no basis to form an opinion on how well other agencies are complying with veterans’ preference requirements.    Instead, adherence to veterans’ preference is best determined on a case-by-case basis, and assessing overall agency adherence to veterans’ preference requires an in-depth understanding of each agency’s particular hiring practices and decisions. 

In conclusion, the MSPB is proud of its record of providing fair and efficient resolution of individual disputes within its jurisdiction, including those filed alleging violations of veterans’ rights.  Additionally, the MSPB will continue to provide valuable objective analyses of the Federal civil service through the studies it conducts.  We would be happy to be of further assistance or provide additional information to the Subcommittee as its Members and staff carry out this important work.