OPM Would Lose Its Independence, Service Functions Under Reorganization Plan
Without responsibilities like retirement processing and administering employee health insurance, observers fear a more politically driven agency.
The Trump administration announced Thursday its plan to reorganize the federal government, which includes a proposal to transfer nearly all of the Office of Personnel Management’s service responsibilities and to remove the agency’s independent status.
Under the plan, which was more than a year in the offing, the agency’s security clearance functions, housed in the National Background Investigations Bureau, would be transferred to the Defense Department. That proposal formalizes and accelerates a process authorized in the 2018 National Defense Authorization Act, which ordered the transfer of Defense Department security clearance investigations away from OPM.
Additionally, OPM’s other service functions, including retirement claims processing, administration of the Federal Employees Health Benefits Program and other insurance programs, and HR Solutions would be transferred to the General Services Administration, which would be renamed the Government Services Agency.
OPM’s Employee Services office would be moved under the supervision of the Executive Office of the President, while “the placement of other OPM offices and functions will be determined at a later date.”
Most observers agreed changes to OPM on this scale would require action from Congress. But in a call with reporters Thursday, Office of Management and Budget Deputy Director for Management Margaret Weichert suggested some aspects could be done administratively.
“There’s a proposal around elevating strategic functions of OPM into the Executive Office of the President and moving [background] investigations to the Department of Defense,” she said. “Those are examples of things we can do today.”
But the prospect of moving OPM’s policy personnel to the White House raises questions about the management of the agency’s transactional services while the administration waits for Congress to act.
In the reorganization plan, the White House stated that OPM’s various service delivery functions hamstring the agency from effectively working on governmentwide human capital management.
“The civil service system is overdue for an overhaul, and that overhaul would be implemented under a new management structure that is more focused on core priorities and that has not been molded around the existing, archaic framework of civil service rules and regulations,” the plan said. “Once complete, a transition into EOP could create a more streamlined personnel management unit that is less expensive to operate.”
Weichert said the changes would allow the agency to refocus on the need to develop a 21st-century workforce.
“This lets people focus on the merit system principles and the workforce needs of the federal government,” she said. “That’s the part of OPM’s mission that’s gotten lost under the burden of transactional processes that are very paper-intensive.”
But observers were skeptical of the plan. Max Stier, president and CEO of the Partnership for Public Service, speaking generally about reorganization efforts Wednesday ahead of the plan’s release, said that OPM is often unfairly scapegoated for leadership problems that occur across federal agencies.
“I think in many instances, with complaints about OPM, the folks in the agencies making them need to look in the mirror,” he said. “The responsibility is not simply OPM’s but theirs as well . . . OPM has been in the area of supporting agencies, but under-resourced. I think these issues don’t get addressed just by moving the boxes around. It would be a mistake to believe that a structural reorganization could address these fundamental issues.”
Robert Tobias, former president of the National Treasury Employees Union and a distinguished practitioner in residence at American University’s School of Public Affairs, said removing key service responsibilities from OPM could hurt the agency’s nonpartisan reputation at a critical time, as the agency moves to implement controversial workforce executive orders and as Director Jeff Pon plans to unveil major civil service reform legislation later this year.
“When OPM was created under the  Civil Service Reform Act, it was really designed to assist the premiere employees, both management and non-management, to be more effective in their roles and responsibilities,” he said. “Moving it under [the White House] removes that nonpolitical nature that was arguably part of the original conception.”
Tobias noted that he was supportive of plans to move security clearance background checks out of OPM, arguing that unlike other support services, that process was not part of OPM’s original mission.
Donald Kettl, a professor in the University of Texas at Austin’s Lyndon B. Johnson School of Public Affairs at the LBJ Washington Center, said that although the proposals on OPM are among the more reasonable aspects of the reorganization plan, their proximity with more controversial measures, like consolidating the Education and Labor departments, could scuttle their prospects in Congress.
Kettl said that more work needs to be done in order to have a realistic reform plan for the federal government’s HR agency.
“It’s still an open question about what residual functions remain after you carve out the service and security clearance functions,” Kettl said. “The focus here seems to be primarily on pulling things out, and less on what should be done with what’s left. That’s the real question here.”
Another aspect of the proposal that raises questions is that the plan officially calls on OPM to begin implementation of the employee digital record, a program announced in President Trump’s management agenda. An OPM spokesperson declined to comment on how it could fulfill that duty if key implementation levers, like retirement processing and FEHBP, are moved to other agencies.
In an email, an OPM spokesperson said the agency supports the reorganization plan.
“The Civil Service first came about in 1883, when the Pendleton Act established an impartial, professional workforce based on the merit principle—that employees should be judged only on how well they can do the job,” the spokesperson wrote. “OPM advances that noble tradition today by supporting President Trump’s reform and reorganization plan to transform the federal government into a more efficient, effective organization. We are committed to doing our part to serve as responsible stewards of taxpayer dollars as we elevate the profile of human resources and modernize the American civil service for the 21st century.”
In a statement, Rep. Gerry Connolly, D-Va., blasted the reorganization plan, and specifically called out the proposed changes at OPM.
“It would shift essential services out of OPM, including retirement benefit services and FEHBP implementation, at precisely the wrong time,” Connolly said. “There are ways to improve efficiency and modernize the federal government. This isn’t it.”