Rehiring buyout recipients doesn't make sense

Does it make sense to pay people incentives to leave their jobs, only to hire them back a few years later? According to a recent General Accounting Office review ("Federal Downsizing: Controls Needed to Ensure Compliance With Buyout Repayment Provisions," GAO/GGD-98-12, January 1998), the federal government apparently thinks it does.

As part of its downsizing efforts over the past several years, the government has offered employees of certain agencies incentive payments, or buyouts, to give up their jobs. Employees who accept buyouts are not prohibited from returning to federal employment or working under contract for the government.

But under a provision of the Federal Workforce Restructuring Act, recipients are required to repay the buyout if they return to federal employment within five years of their separation. The law also applies to retired federal employees who return to work within five years under a personal service contract— one that, by its terms or the way it is administered, makes the contract person, in effect, a government employee. Employees may request waivers to the FWRA provision.

The purpose of the repayment provision is to make sure that federal employees who receive buyouts in exchange for leaving government service do not return. After all, there's not much point in paying someone to quit or retire and then hiring them back at the same pay level. You won't save money doing that.

Well, in the federal government, all things are possible, as a recent GAO review suggests. In response to a congressional request, GAO looked at 23 buyout recipients who returned to federal employment in nine agencies within the Defense Department. GAO was asked to determine whether these employees repaid the buyout or if they met the DOD re-employment policy of staying off the government payroll for at least five years.

The results of this limited review suggest there is a serious government-wide problem that needs to be fixed immediately.

GAO noted that a violation of the FWRA repayment provision or the DOD re-employment policy occurred in 11 out of 23 cases. The FWRA repayment provision was violated in nine of the 11 cases, and the DOD re-employment policy was violated in the two other cases.

The remaining 12 cases were not violations. In addition, GAO noted that a DOD inspector general found another case in which an agency employed a buyout recipient who had not repaid the buyout.

GAO also found that additional buyout recipients were working under contract to the federal government, and some of these contracts were expressly identified as personal service contracts subject to the FWRA repayment provision. Guess what? These former federal employees did not make any buyout repayments.

GAO found other contract personnel who were subject to supervision and control by agency officials and were, in effect, working under personal service contracts subject to the FWRA repayment provision. These individuals also failed to repay their buyouts and were not asked to do so.

Regarding internal control procedures, GAO found that none of the nine agencies that it investigated had adequate internal control procedures to provide reasonable assurance that the FWRA repayment provision was met.

Readers of this column may recall that I have criticized GAO in the past for its wavering position on internal controls within federal agencies. In 1980 GAO thought that internal controls were the best thing since sliced bread. But when the Clinton administration placed priority on staffing reductions, internal controls (which require warm bodies to administer) went by the wayside, with GAO's tacit approval.

Now the chickens are coming home to roost. Can you imagine a private company using financial inducements to reduce payroll costs and then hiring back the same workers at the same salary and with full benefits?

-- Bureaucratus is a retired federal employee who contributes regularly to Federal Computer Week.

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