Peters, Heitkamp Urge GAO to Review Effect of Hiring Freeze on Government Spending

WASHINGTON, DC – U.S. Senators Gary Peters (MI), Ranking Member on the Subcommittee on Federal Spending Oversight and Emergency Management, and Heidi Heitkamp (ND), Ranking Member of the Subcommittee on Regulatory Affairs and Federal Management sent a letter urging the Government Accountability Office (GAO) to review the implementation of President Trump’s hiring freeze for all federal civilian employees. Previous GAO reports have found that hiring freezes under the Carter and Reagan Administrations resulted in agencies compensating for personnel shortages by using contractors despite prohibitions to do so, costing taxpayers up to 60% more than the cost of using federal employees for the same work. 

“While we applaud efforts to streamline government, ensure efficient operations and encourage good stewardship of taxpayer dollars, we are extremely concerned about the potential for increased government spending and waste under this freeze,” wrote Peters and Heitkamp in their letter. “Across the board cuts and a shrinking of the total federal workforce are not the answer to making the federal government more efficient or effective.”

In their letter, the Senators, who are charged with oversight of federal spending and the federal workforce, raised concerns that the hiring freeze could incentivize agencies to increase the use of contractors, increase operational costs and decrease efficiency, and do little to control the size of the federal workforce.

“GAO found that past government-wide hiring freezes hindered agency missions, caused inefficient staff utilization and clerical shortages, and resulted in lost revenue and uncollected debts,” the Senators continued. “We simply cannot afford these potential shortfalls in our current government operations and our trusted public servants and constituents who rely on these services deserve much better.”

The text of the Senators’ letter is available below or here:

The Honorable Gene L. Dodaro

Comptroller General

U.S. Government Accountability Office

441 G St. NW

Washington, DC 20548

Dear Mr. Dodaro:

We write to request that the Government Accountability Office (GAO) conduct a review of the implementation of President Trump’s January 23, 2017, Presidential Memorandum (PM), which ordered a hiring freeze for all federal civilian employees.

While we applaud efforts to streamline government, ensure efficient operations and encourage good stewardship of taxpayer dollars, we are extremely concerned about the potential for increased government spending and waste under this freeze. In GAO’s review of President Carter and Reagan’s hiring freezes, it found that agencies used contractors to compensate for in-house resource shortages despite the prohibition against doing so.  GAO found that “the contractor’s work satisfied a program need which was expected to continue for at least one year, and could be performed by in-house personnel (i.e., no special expertise was required).”  Contracting out for tasks that are inherently governmental in nature goes against long-standing federal contracting law and can waste federal resources.  GAO has identified several cases in which contracting was substantially more expensive, in some cases 60% more, than the cost of using respective agency employees to conduct the same work. 

While the PM states that contracting should not be used to circumvent the intent of the freeze, this language is almost identical to the language in the Carter and Reagan freezes, which was disregarded by certain agencies that encountered staffing challenges.  Additionally, research has shown that staffing shortages provide incentives for agencies to increase its contracting.

We are also concerned that this freeze will do little to save money or reduce the size of the federal workforce.  During the previous freezes, GAO found that the Office of Management and Budget (OMB) failed to identify “either gross savings in salaries and benefits or offsetting costs.”  On the contrary, GAO found that the freezes actually increased certain operational costs and reduced efficiency.  GAO also found that “government-wide hiring freezes have not been an effective means of controlling federal employment.” 

Finally, we are concerned about the important programs and customer service needs that could be disrupted under this freeze.  Across the board cuts and a shrinking of the total federal workforce are not the answer to making the federal government more efficient or effective.  GAO found that past government-wide hiring freezes hindered agency missions, caused inefficient staff utilization and clerical shortages, and resulted in lost revenue and uncollected debts.  This freeze could also negatively affect the talent and morale of our workforce.  We simply cannot afford these potential shortfalls in our current government operations and our trusted public servants and constituents who rely on these services deserve much better.

As the Ranking Members charged with oversight of federal spending and the federal workforce, we ask that GAO examine:

1. The extent to which work formerly done by federal employees is or is likely to be done by contractors and the costs associated with those services;
2. The historical and projected size of the federal workforce and any savings or losses incurred as a result of the freeze;
3. The impact of the freeze on agencies’ budget, mission programs, customer service, workload, morale, retirement, and other employment trends;
4. The guidance and communication from OMB and OPM to agencies throughout the freeze and after a plan to reduce the size of the federal workforce is implemented; and
5. Any lessons learned from the current hiring freeze as well as prior freezes and downsizing efforts that can be applied to similar efforts in the future.

We appreciate your attention to these important matters and look forward to your response.