CABINET COUNCIL ON MANAGEMENT AND ADMINISTRATION MINUTES MARCH 7, 1985 MEETING

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87M00539R002303870001-5
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 16
• Document Creation Date: December 22, 2016
• Document Release Date: September 9, 2009
• Sequence Number: 1
• Publication Date: April 2, 1985
• Content Type: MEMO

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THE WHITE HOUSE
WASHINGTON
943/1
Date: 4/2/85
Due By:
Subject: Cabinet Council on Management and Administration Minutes
March 7, 1985 Meeting
Vice President
State
Treasury
Defense
Justice
Interior
Agriculture
Commerce
Labor
HHS
HUD
Transportation
Energy
Education
CIA
UN
USTR
Chief of Staff
GSA
EPA
NASA
OPM
VA
SBA
CEA
CEQ
OSTP
ACUS
Attached for your information are the minutes of the
March 7, 1985 meeting of the Cabinet Council on Management
and Administration.
^ Alfred H. Kingon
Cabinet Secretary
456-2823
(Ground Floor, West Wing)
^ Don Clarey
Tom Gibson
^ Larry Herbolsheimer
r-11 ' I
As-5 f Director
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: CIA-R DP87M00539R00230387000101-5 Cabinet et Affairs /~~ (~
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CABINET COUNCIL ON MANAGEMENT AND ADMINISTRATION
March-71985. Meeting #36-
2:00p-.m The Cabinet Room
Participants: The: President, Meese, Baldrige, Casey,; Bennett,
Herrington, Walters,,L. Smith,,Svahn, Ford; Taft, McLaughlin,.C.
Baker;. Knapp,, Burnley,. Wright,-: R. Smi.th,1 Ink, Niskanen, Cr-ibb,
Verstandig, Kingon, Bledsoe,,.,Fitzwater?`Risque,' Barbody, Chapman,
Murphy, Nesterczuk, Kline;:'.,
o Federal Management.t;,The President began the meeting by
reading from his, March, 4 -{1g85 memorandum' on Management of the
Federal Government;,.. and encouraging department and agency heads
to actively carry but our.secorid,term management-initiatives.
1. Real Propdrty,.Management. Attorney General 'Meese introduced
Dwight Ink, newly, appointed Deputy Adrtinis,tratox,of General
Services Administration:, and Ray Kline, who-recently retired as
Acting GSA Administrator, 1and.who was chairman of, the CCMA
Working Group';on Real Property 'Management. - Mr. Meese briefly
,,reviewed concerns. over shortcomings in managment of the Federal
government's real property resources; and : the, reasons for
establishing the working group. Mr. Kline described the goals,
chartetr and membership, of the working group, and past efforts to
-achieve savings in the.management of Federal build-ings, lands and
"leased work space. He.menti,oned that the working group met with
,property managers from Prudential Life, Harvard, and the U.S.
Postal `Service;..i,n addition to numerous managers from major
Federal agencies..
Mr. Kline stated general findings that while some progress has
been made to achieve savings, there is no overall Administration
policy, for -reforming property management, little accountability
in agency planningt and management, too much micro-management by
Congress, and inadequate information about Federal land holdings-.
The major' recommendations of the working group related\to these
areas. ; . A
it was recommended that CCMA be the forum for approval of
Presidential policy; that agencies adopt more effective real
property planning and management practices; that GSA be made
responsible for real property management policy development and
oversight; that OMB require and review agency property management
improvement plans and savings, disposal, and reductions targets;
that OMB and GSA cooperatively develop better information about
'Federal property holdings, and propose legislative changes in
support of improved management; and that the Agriculture and
Interior Departments continue to streamline management of public
lands.i It was also recommended that a directive be issued to set
these activities in motion.
 Mr. Meese indicated that congressional review and approval of
individual transactions was particularly troublesome, and that
Justice will examine potential changes in this area. The
President acknowledged the problem of public lands management,
including "checker-boarding" of public and private lands, and
alternating responsibilities of Agriculture and Interior for
management of adjacent lands. Ms. McLaughlin stated that
Interior and Agriculture are working together to bring about
better management practices and division of responsibilities.
Mr. Svahn stated that our focus on sales of individual surplus
properties that are not public lands is having some payoff, but
that problems still exist.
Mr. Kline mentioned the difficulty in placing values on many
Federal properties. Mr. Wright supported the establishment of
sales and other targets in the 0MB management review process, and
stated that if legislative proposals are ready, they can be
incorporated into the broader management legislation to be sent
to Congress in March or April. Mr. Svahn announced the sale of
Hamilton AFB, after ten-years of negotiation and litigation. Mr.
Ink stated that the $45 million sale price was more than twice
what we had anticipated. The President stated that it was
important that proceeds from the sales of these properties go to
the Treasury, except when funds were needed to cover situations
created by the sale.
Mr. Meese recommended that the President approve the report and
authorize issuance of a memorandum or executive order directing
implementation of the working group's recommendations.
ACTION: The President approved the report and directed issuance
of an executive order consistent with the recommendations of the
working group.
2. Federal Pay Comparability. Mr. Meese briefly reviewed the
problems associated with he annual BLS survey of private sector,
white collar pay, the annual recommendations of the President's
Pay Agent (OPM, OMB, DoL), and the alternative pay plans that the
President has sent to Congress for the past several years. He
indicated that this process lacks credibility, yet continues to
be used despite the shortcomings and costs.
Mr. Taft, chairman of the CCMA Working Group on Federal Pay
Comparability, described the efforts of the working group,
indicating that its initial results had been included in the 1984
Pay Agent report. He pointed out specific problems of the
comparability survey as including the absence of state and local
government employee salaries and salaries of employees of small
businesses. The working group evaluated four options: making no
change, administratively reweighting the factors in the existing
survey, expanding the scope of the survey to include additional
employee salaries, and reviewing transition from technical
comparability to market models for setting and adjusting pay.
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Mr. Taft stated that the working group's recommendation is that
the scope of the survey be expanded over the next few years and
that the 1985 Pay Agent report (for FY 1986 pay) present
suggestions on how market models that consider workforce quality
and turnover can be incorporated into the pay-setting process.
Mr. Meese indicated that the Cabinet Council endorsed the
recommendations of the working group. Mr. Ford mentioned that
although funds were not now in the Labor budget for increasing
the scope of the survey, that matter would be taken up with OMB.
The President asked if there are provisions to recognize
geographical differences in pay. Mr. Svahn, Mr. Ink, and Mr.
Nesterczuk commented on this issue. At present, the only
adjustments in white collar pay for local conditions are
increases for high cost areas, such as Alaska and Hawaii.
ACTION: The President approved the recommendations. He directed
that the annual pay comparability survey be expanded, that the
President's Pay Agent develop additional management pay-setting
tools which consider workforce quality and turnover, and that the
FY 1986 Pay Agent report be submitted through CCMA with progress
information and recommendations on the use of market models in
setting Federal white collar pay.
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EXECUTIVE SECRETARIAT
ItOUTING SLIP
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 E WHITE HOUSE
Subject: Cabinet
ALL CABINET MEMBERS
Vice President
State
Treasury
Defense
Justice
Interior
Agriculture
Commerce
Labor
HHS
HUD
Transportation
Energy
Education
Counsellor
USTR
Chief of Staff
GSA
EPA
NASA
OPM
VA
SBA
Action FYI
^ . ^
and Administration with the President-
Real Property Manacerent
Room TOPIC: Federal Pay Policy
1 ecutive Registry
x-9113
CCFA
CCLP
The President will chair a meeting of the Cabinet Council on
Manacement and Administration on Thursday, March 7, at 2:00 P.M.
in the Cabinet Room. All Cabinet Members are encouraged to attend.
Alfred H. Kingon
Cabinet Secretary
456-2823
(Ground Floor, West Wing)
^ Don Clarey
0 Tom Gibson
^ Larry Herbolsheimer
Associate Director
Office of Cabinet Affairs
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DCI -'t
EXEC
REG
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MEMORANDUM FOR CABINET COUNCIL ON MANKGEMEj9T AND ADMINISTRATION
FROM: RALPH C. BLEDSDE 'LSy~ ,,1(,yC,~__
Executive Secretary,!
V
On Thursday, March 7, the President will chair a meeting of the
Cabinet Council on Management and Administration, at 2:00 p.m. in
the Cabinet Room. Two topics will be discussed.
Real Property Management. The first agenda item will include a
report by the CCMA Working Group on Real Property Management. An
Executive Summary of the report is enclosed with this memorandum.
Your representative to the CCMA Executive Secretariat has been
furnished with the entire two-volume report, and has discussed
this issue at Secretariat meetings. Recommendations for improved
management of Federal real property, as outlined in the Executive
Summary, will be presented to the President for his decision.
Federal Pay Policy. The second agenda item will include a report
by the CCMA Working Group on Federal Pay Policy, a copy of which
is enclosed. The Final Report contains action options for
improving the Federal pay comparability system, as discussed at a
CCMA Planning Meeting on September 4, 1984. The revised options
will be presented to the President for his decision.
If you have questions about either of these agenda items, please
contact me at 456-6640.
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REPORT OP THE WORKING GROUP ON
REAL PROPERTY MANAGEMENT
The Cabinet Council on Management and Administration's Working
Group on Real Property Management was established on
September 20, 1984 to conduct a 120 day,. study to identify
improvements needed to manage Federal real property as a national
asset and in the best interests of the American taxpayer. The
Working Group was charged with making recommendations to
strengthen real property management, ensure accountability, and
provide enhanced information for decision making.
The Departments of Agriculture and Interior hold 95% of the
732 million acres of Federal lands. Owned building space
totaling 2.6 billion square feet is primarily controlled by the
Department of Defense (70%), the Veterans Administration, the
General Services Administration, and the United States Postal
Service. The government also spent almost $1.2 billion in
FY 1983 to lease property in the United. States.
While it is not possible to specify the total annual cost or
value of the complete inventory of real property, the potential
savings from improved government-wide real property management
are impressive. The CCMA Workspace Management initiative
estimated that annual savings of as much as $1.8 billion can be
achieved by reducing Federal work space. The President's Private
Sector Survey on Cost Control estimated third year savings of
$841 million from implementation of real property management
improvements. Revenues of $1.25 billion were projected by the
Property Review Board to be generated through increased property
disposals.
The Working Group's report contains a comprehensive look at
Federal real property management practices. Key findings are:
o There is no central place in the, government where real
property management policy is established or coordinated.
o There are a lack of incentives for improved performance.
Agency management is seldom held accountable.
o Real property data which would allow better management and
control are generally unavailable or unreliable.
o Present legislative authorities do not provide sufficient
flexibility.
 The principal recommendations in the report to enhance Federal
management of real property assets are:
o The CCMA should be the forum in which the President
approves real property management policies.
o The GSA should manage multiple tenant and general purpose
space; delegate operational responsibility, with
resources, to agencies having the willingness and
capability to manage such delegations and where this is
cost effective; and provide government-wide policy
oversight in support of the CCMA.
o The OMB should assure that agencies develop real property
management plans, including targets (sales, space
reductions, productivity improvements, etc.), through the
management review and budget processes.
o Agencies should establish internal systems of
accountability for real property management.
o Proceeds from the disposal or transfer of properties
should be used to help retire the national debt and to
further improve and support property management.
o The world-wide inventory of real property should be
improved. GSA should also develop a generic real property
management information system for government-wide use.
o Proposals should be submitted to the Congress to eliminate
certain sections of the Economy Act of 1932, to eliminate
the Congressional prospectus process, and to authorize
alternative financing techniques for acquiring and
disposing of real property.
o The Departments of Agriculture and Interior should improve
the management of public lands by streamlining procedures
and submitting needed legislation. Whenever appropriate,
the fair market value concept should be used.
The next critical steps to be taken by the CCMA are an
acknowledgment that major changes are necessary, a commitment to
real property management improvement, and the resolve to keep the
pressure on to accomplish improved performance.
Upon approval of this report, these steps should be taken:
o Issue an Executive Order or Presidential memorandum
outlining the Administration's real property initiative.
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 o Submit to the Congress needed legislative changes.
o Initiate agency preparation of annual real property
management improvement plans by OMB direction and
encourage agency leadership to strengthen internal real
property accountability.
o Initiate several studies to look at: alternatives to the
Federal Buildings Fund; financing options; interagency
transfer payments; outgranting; consolidated services and
lead agency opportunities; and potential interests arising
from grant, contract, and loan activities; and
implementation of fair market inventory valuation. These
studies should be completed by the President's Council on
Management Improvement under CCMA direction.
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FINAL REPORT - WORKING GROUP ON-WHITE COLLAR PAY
Background
The CCMA Working Group on Federal Pay Policy was announced on
December 19, 1983. This group includes-Dick Lyng, Deputy
Secretary of Agriculture; Danny Boggs, Deputy Secretary of
Energy; Lowell Jensen, Acting Deputy Attorney General; Ford Ford,
Under Secretary of Labor; Jim Burnley, Deputy Secretary of
Transportation; Don Devine, Director, Office of Personnel
Management; Connie Horner, Associate Director of the Office of
Management and Budget; and is chaired by William H. Taft, IV,
Deputy Secretary of Defense.
The Working Group was tasked to review the current pay
comparability system described in statute and to recommend better
ways of making pay decisions. For the past six years, the U.S.
Presidents have adopted alternative pay plans rather than accept
the results of the current comparability process in determining
Federal pay raises. The issue is important to the Administration
because it involves large budget figures, and because of the
personnel management concern for a reliable and fair compensation
system which supports employee morale. The cost of the 3.5 P-
percent pay raise for FY 1985, delayed until January 1985, is $1
billion.
The Working Group was tasked with providing an interim report to
CCMA on March 30 and a final recommendation on April 27, 1984.
Working Group level meetings were held on March 12, March 29,
May 29, and June 1. In addition, a staff study team was formed
in January to provide analytic and staff support, and OPM
contracted with a consulting firm, TPF&C, to provide an
independent evaluation of OPM's proposals to adjust pay
comparability measures.
The report was presented to the CCMA on September 4, 1984. At
that time, the CCMA recommended that the Working Group
specifically consider the results of an ongoing OPM study of
market model approaches and incorporate quit rate concepts in the
presentation at a CCMA meeting with the President. OPM
transmitted its study on December 12, 1984.
Discussion
There was general agreement among Working Group members that the
current PATC survey has resulted in unrealistically high pay
increase estimates. These high estimates have been a function of
the scope of current PATC survey which by past practice,
underrepresents small firms, certain service occupations, and
administrative occupations. By law, state and local government
data are excluded from the data base. The annual use of the
alternative pay plan has permitted the Administration to achieve
pay raises which were in keeping with budget targets. However
continuing to follow the mechanics of a system which projects
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that a pay raise of over 20 percent would be necessary to comply
with technical comparability, and then annually rejecting the
results of that process contributes to political and work force
morale problems.
The principal options for changing the pay adjustment mechanism
discussed by the Working Group were:
o Administratively reweight the current PATC survey (OPM
proposal)
o Administratively/legislatively expand the scope of the
current survey (DoL proposal)
o Review transition from technical comparability to market
models
The Working Group evaluated the options in terms of a specific
recommendation for setting pay in 1985 and in terms of setting
policy direction for determining future pay adjustments. The
Working Group considered the range of options in terms of budget
considerations, management objectives, political considerations,
work force morale, and technical and methodological issues.
Option 1 - Make no change.
Continuation of the current system over the long term was not
endorsed by the Working Group. The consensus was that this
system surveys a too narrow scope of the work force and has
projected a pay increase of over 20 percent. These results are
politically and fiscally unacceptable to the legislative branch,
executive branch, and the public. They have produced work force
morale problems, and are not practically linked to the ability to
attract and retain the required work force. However, making no
change was considered a realistic option in 1985. The
alternative pay plan levels have already been identified in the
budget and endorsed by Congress in the Budget Reconciliation Act.
Option 2 - Administratively reweight the existing PATC survey.
Various alternatives to reweight the results of the current PATC
survey were offered by OPM. The original reweighting scheme
included four factors:
o reweight for small firms
o use entry rates
o weights for administrative workers
o eliminate the extremes.
 This proposal had been recommended by OPM in 1984, but not
adopted by the Pay Agent in that year. The original
administrative reweighting scheme was independently evaluated in
three reviews: by Leon Greenberg, under contract to the Advisory
Committee on Federal Pay; by the Statistical Review Group made up
of professional statisticians and economists from federal
agencies; and by the compensation consulting firm, TPF&C, under
contract to OPM. Each of these studies identified technical
shortcomings in the existing OPM proposal. The Working Group
agreed that administrative reweighting is an option but could not
endorse the original OPM proposal due to consistently identified
technical flaws. Nor could the Working Group endorse the
alternative OPM reweighting options either for 1985 or for the
long term. The Working Group endorsed publication of alternative
indicators of wage and salary change to demonstrate the
unreasonably high level of the annual comparability result. A
majority of the Pay Agent members will decide on the particular
indicators to be used, which could include OPM's reweighting
proposal, the Employment Cost Index (ECI), wage settlement data,
among others.
Option 3 - Expand the scope of the current PATC survey.
The DoL offered a plan, to be accomplished by 1987, to address
gaps in the current PATC survey through a series of
administrative and legislative initiatives to broaden the scope
of the PATC survey. This plan would:
o expand the PATC survey to smaller establishments (20
workers) in 1985
o include additional service industries and non-profit
organizations. not now surveyed
o survey state and local governments and seek legislation
for inclusion in PATC.
This proposal appealed to the working Group as a long term
consideration. It presented a positive course of action which
would address existing deficiencies of the PATC in a
methodologically sound manner. Development/endorsement of such a
plan could be part of the 1985 President's Pay Agent report.
Implementation of this plan requires resource adjustments.
Option 4 - Review transition from technical comparability to
market models as a basis for setting and adjusting pay.
Little consideration was given to this alternative by the Working
Group. However, Working Group discussions often focused on
issues such as impact of pension reform, on retention, which could
be addressed by market model techniques.
A market model would set total pay for Federal employees at
levels no higher than necessary to cost-effectively recruit and
retain the quality and quantity of personnel necessary to perform
the work. The market model technique would specifically consider
Federal work force occupation and experience mix objectives and
 the sensitivity of that labor force to relative compensation
levels. Then compensation adjustments can be gauged to
cost-effectively align accession and retention patterns with work
force occupation and experience mix objectives. Successful
application of this approach in setting pay policy requires that
the membership of the President's Pay Agent first develop and
endorse models which reliably project how compensation changes
affect Federal work force behavior. Such models currently under
development in the Department of Defense may serve as a point of
departure. Once the effect of compensation changes on labor
force behavior is estimated, the Pay Agent report can incorporate
consideration of quit rate behavior in pay recommendations.
Comparisons of quit rate data need careful evaluation. The size
of the Federal work force masks work force turbulence due to job
moves within the system which may or may not affect compensation.
Setting pay to achieve separation rates for a basically full-time
permanent, high skill white collar Federal labor force that are
similar to a low skill blue collar private sector work force
could cost the government more in work, force inefficiency than is
saved on reduced compensation. The members of the President's
Pay Agent should evaluate how demographic characteristics of the
work force, occupations, work force size, and other factors
affect quit rate behavior in evaluating how to apply market
models to adjust quit behavior. The annual President's Pay Agent
report could encourage development of these and other labor
market indicators as additional tools to evaluate Federal pay.
The Pay Agent report could also note progress and serve as a
status report on how these tools are being applied. The OPM
report, "Reforming Federal Pay: An Examination of More Realistic
Pay Alternatives," prepared for the CCMA to support this Working
Group serves as useful initial discussion of market model
applications which can be further developed by the Pay Agent
members.
Working Group Recommendations
1. The Working Group supports pursuit of a series of reforms
over the next three years to expand the scope of the PATC in a
way that corrects PATC shortcomings (Option 3). These reforms
will be incremental; the President will retain alternative pay
plan authority throughout.
2. The President's Pay Agent report for 1985 should include a
frank critique of the present system's technical shortcomings.
The report would include the comparability adjustment based on
current methodology as well as illustrative examples of what the
comparability figure would be using various other indicators as
described. The Pay Agent report will not endorse any of these
specific indicators.
3. Development of additional management tools which specifically
consider work force indicators such as quality and turnover
should be encouraged because of difficulties in measuring total
pay comparability in combination with working conditions.
 The report of the President's Pay Agent for FY 1986, made in the
summer of 1985, should document progress in developing these
tools and make specific recommendations for applying market
models to the annual pay adjustment process. This Pay Agent
report should be presented to the President through the Cabinet
Council on Management and Administration.