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FPCD-78-64 1 (1978-08-02)

handle is hein.gao/gaobaaxve0001 and id is 1 raw text is: DOCUMENT RESUME 06875 - [B21672001 Department of Defense Is Overcospensaing Its foreign Employees. FPCD-78-64; B-179343. August 2, 1978. 16 pp. + appendix (6 pp.). Report to Sen. Warren G. Magnuson, Chairsan, Senate Committee on Appropriations; by Elmer B. Staats, Ccmptrcller General. Issue Area: Personnel Management and Compensation (300); Federal Personnel Management and Compensation: Pay Principles Pnd Pay Determination Processes (306);Federal Personnel Management and Compensation: Retirement Policies and Practices (307). Contact: Federal Personnel and Compensation Div. Budget Function: National Defense: Department of Defense - Military (except procurement & contrac.ts) (051); Income Security: Faderal Employee Retirement and Disability (602). Orqanization Concerned: Department of Lefense; Department cf the Navy; Department of the Air rorce; Depart Eiet cf the Army. Congressional Relevance: House Committee cn Arueo Services; Senate Committee on Armed Services. Sen. Warren G. Magnuson. Authority: Foreign Service Act. H. Bert. 95-68. As of January 1, 1978, the tepartment of Defense (DOD) employed about 151,800 foreign natiovals at foreign installations, including about 121,200 paid frcm appropriated funds. Almost 90% of the employees were located in five countries--Germany, Japan, Korea, th Philippines, and Italy. The Foreign Service Act provides that compensation fcr foreign national employees will be based cn Iccally prevailing rates and practicss consistent with the public interest. Findings/Conclusions: Compensation adjustments for foreign national employees are generally deterahned by two methods: periodic wage surveys as in Korea, Italy, and thu PhiliFpines; and govertment-to-government negotiations as in Japan and Germany. To establish comparability uith the private sector, DOD annually adiusts the value of regulat Fay items but considers and adjusts benefits separately. Combined analysis of pay and benefits would give DOD more flexibility tc fcllov changes in private sector practices. DOD is restricted from paying prevailing rates because: compensation under indirect hire systems is based on government-to-government negotiations rather than the more objective results of wage surveys; outdated labor agreements contain concessions written when labor costs were relatively inexpensive; and political sensitivities and/or influential labor unions limit opportunities fcr corrective action. Recommendations: DOD should: combine Fay and benefits when determining annual comparability adjustments; determine whether GAO recommendations for wage survey improvements are applicable to other foreign areas and, in the future, mcnitor the wage setting process more closely to further improve and standardize wage survey procedures; adcpt separation pay liquidation plans in areas having separation plans similar to

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