VETERANS PREFERENCES: CURRENT LAW AND PROPOSED LEGISLATION

CRS Report for Congress
Veterans Preferences:
Congress Enacts Changes
Updated November 19, 1998
Dennis W. Snook
Specialist, Social Legislation
Education and Public Welfare

Congressional Research Service ˜ The Library of Congress

A^BSTRACT
This report provides background on veterans preference in federal employment, and^th
discusses issues raised during deliberation in the 105 Congress of two bills to amend
existing law. Veterans’ advocates asserted that a declining proportion of veterans among
federal employees was an indication that the preference policy was not working as Congress
intended. The two bills, H.R. 240 and S. 1021, addressed some of these concerns, and S.
1021, as amended, was enacted as P. L. 105-339. This report will be updated for further
developments only.

Veterans Preferences: Congress Enacts Changes
Summary
Late in the 105 Congress, changes to veterans preferences were enacted as P.L.^th
105-339, the Veterans Employment Opportunities Act of 1998. Most federal
agencies are required by law to grant preferences in federal hiring and retention to
veterans with service-connected disabilities, and certain other veterans whose service
encompassed specified periods of time. The proportion of veterans as a share of the
federal workforce declined from 37% in 1984 to 28% in 1995, and some veterans’
advocates contended that the decline reflected the failure of existing preferences to
give veterans the advantages that their preference-eligible status should entail.
Included among their concerns about existing law:
!Veterans were not able to apply for all open jobs
!Some veterans claimed that they were improperly denied appointment
!Some believed that veterans were targeted during Reductions-in-Force
!In cases where their rights may have been ignored, any appeal was difficult
!Certain agencies were excluded from preference requirements
H.R. 240, which passed the House during the 1 Session, would have expanded^st
the number of federal jobs open to applications from veterans with at least 3 years
active service; provided more protections to veterans during reductions-in-force,
including increasing job transfer opportunities for veterans during RIFs and requiring
agencies to establish Priority Placement Programs to help workers who lost jobs in
a RIF; and expanded preference requirements to some excluded positions in the
White House and in the legislative and judicial branches. The bill included language
to make violating veterans preferences a prohibited and punishable personnel
practice, adding new redress procedures for veterans who believed that their
preference rights were not honored.
S. 1021, originally a companion to H.R. 240, was reported by the Senate
Committee on Veterans Affairs with amendments moderating the language
expanding application opportunities and eliminating the RIF protections. The
Committee left in the proposed redress procedures, and added provisions that would
give veterans of the Persian Gulf War preferences when they seek employment with
federal contractors.
The new law will probably have no appreciable effect on the proportion of
veterans in the federal workforce, which is higher than in the civilian workforce
generally. While the law will increase opportunities for veterans to be considered for
federal jobs, it will not change the process by which applicants are appointed in
agencies where veterans preferences now apply. The new law gives veterans a means
to challenge personnel actions that they believe are adverse to their interests as
veterans. While this new “redress” right will not necessarily alter the basis for
personnel decisions, many veterans believe that the existence of the right will
discourage managers from seeking ways to avoid the preferential treatment eligible
veterans have earned through their military service.

Contents
Background: Veterans Preferences in Policy and Practice.................1
Underlying Policy Rationale....................................1
Compensation for disability................................1
Readjustment at the completion of service.....................1
Inducement at enlistment; reward for service...................1
Eligibility .................................................. 1
Veterans Preferences in a Competitive Civil Service..................2
Application of Veterans Preferences..............................3
Preferences in federal hiring................................3
Preferences during Reductions-in-Force.......................4
Additional preference rights................................4
The Historical Perspective: The View of the Bradley Commission ......5
Effect of Veterans Preferences on Federal Employment...................6
The Proportion of Federal Executive Branch Jobs Held by Veterans.....6
Trends in federal hiring policy..............................6
Aging of the veteran population.............................7
Veterans in federal jobs...................................8
Veterans and federal hiring.................................8
A Bias Against Veterans?......................................8
Amending Veterans Preferences:
H.R. 240; S. 1021; and P.L. 105-339............................10
Addressing Perceived Problems with Veterans Preference Law........10
As passed by the House, the original legislation (H.R. 240) proposed
to increase opportunities for veterans to be considered for federal
jobs ............................................. 11
H.R. 240 would have added retention protection. P.L. 105-339 does
not contain these provisions...........................12
Both bills expanded appeal rights...........................13
The legislated added provisions to improve compliance..........13
The legislation expands coverage to other agencies.............14
P.L. 105-339 expanded coverage to federal contractors..........14
Action on H.R. 240 and S. 1021...................................15

Veterans Preferences:
Congress Enacts Changes
Background: Veterans Preferences in Policy and Practice
Underlying Policy Rationale
Compensation for disability. Beginning with the Civil War (and perhaps from
the beginning of the Republic on an informal basis), disabilities sustained during U.S.
military service were regarded as creating an obligation upon the government to help
the disabled veterans during their remaining years. Preferential treatment in federal
hiring and retention reflects this obligation to disabled veterans, and in some
circumstances, dependents of disabled or deceased veterans.
Readjustment at the completion of service. In the Veterans Preference Act
of 1944, Congress gave the federal government a lead role in addressing problems
arising from demobilization of large numbers of troops. The Act gave veterans
competitive advantages for federal openings, and for retention as the government
began to scale back from its wartime employment levels. Subsequent amendments
to the Act gave similar readjustment assistance to veterans of Korea, Vietnam, and
the Persian Gulf.
Inducement at enlistment; reward for service. Preferences can also be seen
as a measure encouraging enlistment, and/or as a reward for service, especially
during a period in which military service seems likely to lead to potential combat.
Although evidence about the number of volunteers who enter military service largely
because of enhanced federal employment opportunities would be difficult to develop,
it is likely that for many recruits, preferences are one of several factors contributing
to a perception that a period of enlistment will improve financial security once the
service is completed.
Eligibility¹
Veterans who sustained a disability traceable to a period of honorable military
service are eligible for veterans preference. Other veterans eligible for veterans’
preferences, must have received an honorable or general discharge, and must
generally meet other requirements about duration, period of time, or location of
active duty. Military retirees at the rank of major, lieutenant commander, or higher,
are not eligible for veteran preferences unless they have a service-connected
disability. Nondisabled veterans qualify for preferences if they meet the above and:

This section discusses eligibility criteria before enactment of P.L. 105-339. ¹

!After October 14, 1976, they must also have served in a war declared by
Congress, or during a campaign for which a campaign medal was awarded
and;
!In addition, after September 7, 1980, they must have completed 2 years active
duty, or for the full period for which they were called or ordered to active
duty; unless they served on active duty during the period beginning on August
2, 1990, and ending on January 2, 1992, and completed the period for which
they were called or ordered.
Nondisabled veterans also qualify if they meet the general requirements and they
served:
!Anytime during the period December 7, 1941, to July 1, 1955; or
!For more than 180 consecutive days, any part of which occurred after January

31, 1955, and before October 15, 1976.

In addition, spouses and mothers of disabled veterans are also eligible for
preferences under certain conditions: unmarried surviving spouses of veterans who
died of service-connected conditions or spouses of veterans who are unable to work
because of service-connected disabilities; and mothers of veterans who died in
service or who are totally and permanently disabled from a service-connected
condition, qualify for certain preferences.
Provisions in P.L. 105-85 (the Defense Authorization Act of 1998) give veterans
preference status to veterans of service during the Persian Gulf War, regardless of
whether their service was in the Gulf. Finally, P.L. 105-85 contains provisions that
expand preference eligibility to other veterans who served after November 20, 1995
in Bosnia and nearby areas affected by that conflict.
Veterans Preferences in a Competitive Civil Service ²
The modern federal civil service originated with passage of the Pendleton Act
in 1883. The Act brought together two views about contemporary federal service:
!Concern that increasingly complex and essential federal positions were being
filled without due regard for the qualifications of the applicants; and
!Belief that a competitive civil service was necessary to staff federal jobs with
professional, competent, efficient, and effective employees who would not be
unduly influenced by partisan and personal political loyalties.
The merit-based civil service envisioned by the Pendleton Act requires an
objective evaluation of applications from office-seekers, and hiring decisions that can
withstand close scrutiny as to their fairness and suitability for the position filled.
Veterans preferences affect the objective criteria by giving a competitive advantage
to eligible veterans relative to nonpreference applicants who would otherwise be
regarded as having at least equal qualifications. When the competitive evaluations
result in a numerical score, preference points are added to that score, thereby

The body of veterans preference law is found in U.S.C, Title 5, section 2108. ²

advancing the veterans above competitors with scores that would otherwise be equal
to or slightly above the scores the veterans would have had were they not given the
additional preference points. (Points cannot cause a score that would otherwise not
pass to be changed to passing.)
Veterans preferences do not assure every veteran a job, nor do they reflect a goal
that all federal vacancies should be filled by qualified veterans. The preferences do
not govern promotions or generally affect assignments or other in-service decisions.
While they provide competitive advantages during RIFs, they do not provide veterans
with absolute protections during such reductions.
Application of Veterans Preferences³
The competitive advantages held by preference-eligible veterans take several
forms, including points added to examination scores, waiver of physical
requirements, more liberal use of military service as applicable experience, and in
some cases, direct hiring into positions excepted from the competitive process. The
present system of preferences originates with the Veterans Preference Act of 1944,
which codified existing rules that the examination scores of veterans seeking federal
employment be raised by either five points (for nondisabled veterans), or 10 points
(for disabled veterans and eligible wives, widows, and mothers). Preference-eligible
veterans also have retention advantages during agency lay-offs. Some veterans are
also eligible for special preferential consideration by federal contractors.
Preferences in federal hiring. A competitive civil service presumes that
information about open positions will be made available, and that applicants will be
competitively ranked according to an examination that establishes the relative merits
of their qualifications for specific positions. The more specific the recruitment
requirements (such as for entry level clerical), the more standardized can be the
examination process (such as the administration of a skills test). Higher level
technical, administrative, or professional positions have requirements that entail a
more detailed examination of potential candidates to determine suitability for the
position to be filled.
Regardless of its form, whether a standardized test, or a detailed examination
of applicants’ pertinent qualifications, the examining system must result in a
numerical rating, with a passing score of 70 out of a possible 100. Candidates are
then ranked on the basis of their passing scores, and the top passing scores are
advanced for further consideration by the selecting officials. Veterans preference-
eligible applicants have points added to their passing scores. Veterans at the top of
a competitive list of applicants are theoretically in the best position to be hired. In
order for an agency to not hire a veteran at the top of the list, the agency must justify
to the Office of Personnel Management (OPM) its reasons for passing over the higher
ranking veteran.

Discussion in this section of the application of veterans’ preferences does not reflect³
changes caused by enactment of P.L. 105-339.

Preferences during Reductions-in-Force. Agencies conducting a RIF specify
the organizational and geographical boundaries within the jurisdiction of the agency
that will be subject to the reduction. A RIF is a two-stage process: employees
vulnerable to release first compete for retention with other employees in similar jobs
(competitive level); if released, they compete with other employees within the
boundaries set by the agency. The law provides that four factors must be taken under
consideration in releasing specific employees: tenure or type of appointment (such
as career or temporary); veterans’ preference; length of service; and performance
ratings.
During the first RIF stage, tenure groups are established, with permanent, career
employees in the highest group, and the remaining more temporary employees
vulnerable to release. About 96% of veterans employed by the federal government
have preferences, and within the career tenure group, those preference-eligible
veterans are placed in a higher retention subgroup than nonveterans, regardless of
length of service. Veterans with disabilities rated at 30% or greater are retained in
their positions over disabled veterans with lesser ratings, and all disabled veterans
have higher retention factors than nondisabled veterans.
Employees unable to hold their positions through the first stage competitive
level have the right to bump an employee with lower retention standing, or to retreat
to a position that the employee previously held, if that position is presently occupied
by an employee with a lower retention standing, and within the boundaries for the
RIF developed by the agency. While a vulnerable employee may bump to a position
the employee has never held, the employee must be qualified for the position, and the
“available” position must have pay and grade no higher, or no more than three grades
lower than the employee’s current position.
Additional preference rights. Physical requirements are waived for
preference-eligible veterans able to perform a prospective job safely and efficiently.
In addition, services performed while on active duty, can be counted as experience
in a preservice job, or as active duty experience, whichever is most beneficial for
those veterans in meeting requirements for specific federal civilian jobs. Finally,
certain postings are available only to qualified preference-eligible veterans so long
as applicants are available. These positions include custodian, guard, elevator
operator, and messenger.
Authority for direct hiring of veterans. In 1970, Congress added authority for
agencies to hire veterans of the Vietnam Era directly, rather than fill such jobs⁴
through the competitive process. Direct hiring authority for nondisabled Vietnam
Era veterans expired December 31, 1995. Subsequent amendments provided
additional direct hiring authority for nondisabled, preference-eligible veterans whose
entire service occurred after the Vietnam Era. All Executive Branch agencies and
instrumentalities, including the U.S. Postal Service, are required to have plans for
increasing the number of veterans hired through this direct hiring authority, which
is applicable to federal jobs at GS-11 or below.

A veteran of the Vietnam Era served at least one day between August 5, 1964 and May 7,⁴

1975, or had some service in Vietnam between February 28, 1961 and May 7, 1975.

“Special” disabled veterans. In 1978, Congress established direct hiring
authority for “special” disabled veterans. Special disabled veterans are those with
service-connected disabilities rated by VA at 30% or higher. At the discretion of the
agency (and within its budget and any employment ceilings), a special disabled
veteran can be hired without being subject to the competitive process, provided the
veteran meets the requirements of the position. These excepted jobs are through
grade GS-11 on the general schedule or its equivalent. After 2 years of successful
performance in the excepted position, the appointment is converted to permanent,
giving that veteran full competitive standing in the competition for promotions, other
positions or assignments, and other personnel actions decided on a competitive basis.
Preferences for veterans seeking nonfederal jobs. In addition, the 1970
legislation provided that special disabled veterans and veterans of the Vietnam Era
are to be granted preferential treatment by contractors doing business with the federal
government. Contractors whose contracts with the federal government exceed
$10,000 were required to “take affirmative action to employ and advance in
employment” these Vietnam Era and disabled veterans.
The Historical Perspective: The View of the Bradley Commission
In 1956, the President’s Commission on Veterans’ Pensions (the Bradley
Commission), assessed the status of veterans preferences, concluding that they have⁵
“... no sound justification, and major changes in the program seem desirable.” This
conclusion was based on several observations:
On hiring:
The initial preference in competing for federal jobs is a justifiable readjustment
benefit, if limited to a reasonable period after discharge from the service. As a
lifetime preference, it is ... self defeating in terms of the readjustment of veterans
just leaving service ... a young veteran must compete mainly against the other,
older veterans who have the same five point preference, plus greater experience
or seasoning on the job. A preference for a more limited period, such as 5 years
after discharge, would thus do more for the veteran who is most in need of
special help.
On retention rights gained through preferences:
Preference in retention during reductions in force for nondisabled veterans has
no real relation to readjustment needs and does violence to the basic principles
of the Federal merit system. The goals of open competition and equal treatment
for all, on the basis of their ability to serve the public as employees, cannot be
achieved if there is arbitrary discrimination in favor of one group based on
factors having nothing to do with their efficiency or with their readjustment
needs as veterans.

President Eisenhower established the commission to review veterans benefits and⁵
appointed its chairman, General Omar Bradley, former commissioner of the Veterans
Administration and a favorite of World War II veterans because of his distinguished
command of U.S. Army forces in Europe.

On appeals when veterans preference does not achieve outcomes satisfactory to a
veteran:
The special appeals procedure for veterans tends to make a traditional and
necessary function of management into an elaborate, costly, and time-consuming
quasi-judicial procedure. The readjustment needs of the veteran do not require
this privilege for more than a reasonable period after discharge from the service.
In spite of the critique offered by the Bradley Commission of the broad array of
veterans preferences, no action was taken and veterans reentering civilian life after
military service have continued to benefit from readjustment opportunities in the
federal government. There has been no criticism of providing preferences to those
veterans who sustained injuries or lingering illnesses traceable to their service.
Effect of Veterans Preferences on Federal Employment
The Proportion of Federal Executive Branch Jobs Held by Veterans⁶
Trends in federal hiring policy. In recent years, the downsizing of the federal
workforce has led to fewer employees newly hired from outside the government, as
employees shift and transfer within agencies to fill jobs vacated through normal
attrition. From 1984 through 1992, the number of first-time entrants into federal
professional and administrative jobs declined by 40%. As the government has gotten
smaller, it has also decentralized agency administrative authority, such as hiring, so
that a more direct link between agency needs and potential applicants could be⁷
developed.
As federal hiring needs have changed, avenues into federal employment have
become more diverse. Fewer jobs are filled by candidates from certificates (a list of
applicants determined most qualified), either developed by the Office of Personnel
Management (OPM) from a pool of all qualified applicants, or at the agency level.
In its 1994 study, the Merit Systems Protection Board (MSPB) found that in 1984,
one-third of new entrants to federal professional and administrative jobs in the
federal Executive Branch were hired from certificates developed from the central
OPM register of qualified applicants. By 1992, that percentage had fallen to 19%.
Positions filled from certificates developed at the agency level declined from 20%
in 1984 to 17% in 1992.

Data is for veterans in the federal Executive Branch workforce, 96% of whom qualify for⁶
veterans preferences. Status of Veterans in the Federal Workforce. Office of Personnel
Management. May 1996.
Entering Professional Positions in the Federal Government, a report to the President and⁷
the Congress of the United States by the U.S. Merit Systems Protection Board, March 1994.

Thus, there are fewer jobs for which preference points are the determining factor
in candidate placement on competitive lists, and fewer occasions in which veterans
would seek entry into federal service from a broad-spectrum register of applicants.⁸
In effect, hiring certificates have been increasingly replaced by other methods.
Positions filled from within agencies rose from 12% in 1984, to 22% by 1992.
Entrants hired through direct hiring authority (including authority that pertains to
certain categories of veterans) had increased from 22% to 29% over the same period.
Aging of the veteran population. Veterans advocates point out that, as a
proportion of the federal executive workforce, the percentage of veterans has
declined, from 37% in 1984, to 28% in 1995. However, because of the aging of the⁹
veteran population relative to the rest of the population of United States, a decline in
the proportion of veterans in both the federal and total civilian workforce can be
expected. Between 1984 and 1996, the median age of all males in the U.S. rose by
1 year, while the median age for male veterans had risen by 5 years. This difference
illustrates the greater relative age of the veteran population, and thus the departure
of large numbers of veterans from the civilian workforce.
This is demonstrated by data on labor force participation of veterans at various
ages. In the age groups of 20-39, and 40-54, labor force participation for male¹⁰
veterans was 90% and 94%, respectively, in FY1996. Large numbers of veterans,
however, trace their service to World War II, and that cohort of veterans had reached
retirement age and largely left the workforce. This demographic shift has been
reflected in an overall decrease in the percentage of veterans in the workforce. In
1992, 82% of nonveteran males over age 20 were in the civilian workforce, compared
to 65% for veterans. Although in FY1996 nonveteran male workforce participation
was largely unchanged (83%), the percentage of male veterans in the civilian
workforce had declined to slightly under 60%.
Thus, as the median age of veterans rises, the proportion of veterans in the
workforce declines. Unless an increasing percentage of veterans in the workforce
become employed by the federal government, a decreasing proportion of veterans
among federal employees should be expected. Maintaining the current proportion of
veterans among federal workers would prove difficult, and perhaps impossible in the
future: given the current rate of entry into the armed forces, by 2010, half of all
current veterans will be over age 62, the current average retirement age for the¹¹
civilian work force.
Veterans in federal jobs. Veterans make up a much larger proportion of the
federal workforce than they do of the civilian workforce as a whole, and to some
extent, that relative share probably reflects the impact of veterans preference laws.¹²

MSPB, Entering Professional Positions in the Federal Government.⁸
OPM, Status of Veterans in the Federal Workforce. ⁹
FY1985, FY1992, and FY1996 Annual Reports of the Secretary of Veterans Affairs.¹⁰
FY1996 Annual Report of the Secretary of Veterans Affairs.¹¹
Except where otherwise noted, data for this section is from: Status of Veterans in the¹²
(continued...)

!Veterans constituted 27.6% of the federal workforce in FY1995, compared to

13.1% of the total civilian workforce.

!The veterans’ proportion of the federal workforce has been relatively stable
since 1992 (28.9% in 1992, 27.6% in 1995) during a period when the total
federal workforce declined by 10%.
!Vietnam Era veterans constituted 17.3% of the federal workforce in FY1995,
compared to 5.7% of the total civilian workforce. The percentage of disabled
veterans in the federal workforce compares favorably with the total workforce
(4.4% to 0.9%).
!The special disabled (rated 30% or more) are much better represented in the
federal government than in the total workforce (1.5% to 0.2%).
Veterans and federal hiring. Another measure of the effect of veterans
preferences is the number of veterans hired.
!Of all employees hired for permanent, full-time federal positions in FY1995,

31% were veterans, increasing from 17% in 1990.

!Of the 25,000 males hired for full time permanent federal jobs in FY1995,

47.7% were veterans. ¹³

!Direct hiring of veterans under special hiring authority increased from 13% to

20% of the total number of veterans hired during the period FY1990-FY1995.

This increase in the percentage of recent positions claimed by veterans accounts
for the relatively stable percentage of veterans in the federal workforce since 1992
and offsets the large number of veterans retiring each year. Between 1992 and 1995,
veterans accounted for over 50% of all retirements from federal jobs.
A Bias Against Veterans?
At times, veterans have asserted that some federal officials are biased against
veterans. According to testimony by OPM officials before the House Civil Service
Subcommittee, 28% of the federal workforce are veterans, and 38% of federal
managers are veterans, which would suggest that bias against veterans is likely to be¹⁴
more episodic, rather than systemic. Notably, the annual percentage of all
promotions earned by veterans has remained stable, at 21-23% since 1990. That
percentage is below the percentage of veterans in the federal workforce. However,
veterans’ average grade levels are already higher (GS 9.9 compared to 9.3), their
service is longer (18.5 years compared to 15.5), and they are older (49 compared to
44), all factors that reduce opportunities for promotion. There are more opportunities
for promotions among younger employees who tend to be at lower grades, and have
shorter service.

(...continued)¹²
Federal Workforce. Office of Personnel Management. May 1996.
Testimony of James King, then director of the Office of Personnel Management, before¹³
the Subcommittee on Civil Service of the House Committee on Government Reform and
Oversight, February 26, 1997.
Testimony of James King, February 26, 1997.¹⁴

Some veterans have contended that the percentage of hiring certificates returned
without securing an appointment is unacceptably high when a veteran is at the top of
the register for consideration. Citing a 1992 GAO report that found that 71% of¹⁵
certificates with veterans at the top were returned unused, compared to 51% for
certificates headed by nonveterans, some veterans advocates have suggested that the
GAO study confirms the existence of a bias against veterans during the appointment
process. The GAO report does not draw that conclusion, and suggests several
reasons for this disproportionate number of certificates that were returned unused.¹⁶
A subsequent detailed study of federal hiring procedures by the Merit Systems
Protection Board (MSPB), found no similar disparate treatment. The MSPB study
also examined the relationship between veterans preferences and officials’ hiring
decisions, and concluded that current practices do not indicate that veterans are
discriminated against in federal hiring, nor do they cause veterans to be hired when
they are not qualified or not suited for the posting. The MSPB study also concluded
that, in spite of a commonly-voiced suspicion reported to researchers, it did not
appear as if more suitable applicants were being passed over simply because a
veteran had preference advantages.
After reviewing the methods used for selecting among available candidates, and
finding that veterans are not encountering systemic difficulties in the hiring process,
the MSPB study concludes that the selection process could be made fairer to veterans
and nonveterans alike. The study recommends giving greater responsibility to
managers to evaluate applicants, because “...the current approach to veterans
preference too often produces results that are not in the best interests of managers or
job candidates, including candidates with veterans preference.” The complexity of
the standard hiring rules has encouraged hiring officials to use alternative procedures
available to them, no matter how cumbersome the steps that must be taken to¹⁷
exercise the hiring discretion that such alternatives provide.
In statements before the House Subcommittee on Civil Service, some veterans¹⁸
indicated a belief that agency officials sometimes design RIFs to target specific
veterans with the intent of removing them. A RIF conducted at the U.S. Geological
Survey (USGS) during 1995 has been cited as an example of a “designer” RIF. GAO
reviewed the USGS procedures and their effect on preference-eligible veterans, and

Federal Hiring: Does Veterans’ Preference Need Updating? U.S. General Accounting¹⁵
Office Report to Congressional Requesters, March 1992.
The GAO report suggests that many certificates were returned because candidates¹⁶
requested by managers did not appear among the top ranked, but when they did, the
certificates were used 84% of the time, and 9% of those hired were veterans. In other
instances, GAO found that veterans declined employment or failed to respond to the agency.
In general, GAO concluded that managers, who are responsible for considering numerous
factors relevant to filling federal positions, could use several different methods to hire
specific persons, or persons with specific qualifications, and that is the principle factor
guiding the use of a certificate or return of a certificate unused.
The Rule of Three in Federal Hiring: Boon or Bane? A Report to the President and the¹⁷
Congress of the United States by the U.S. Merit Systems Protection Board, December 1995.
Testimony before the Subcommittee on Civil Service, April 30, 1996.¹⁸

drew the conclusion that “... employees with veterans’ preference consistently fared
better in the RIF than did employees without such preferences.”¹⁹
One measure of dissatisfaction with practices surrounding the application of
veterans preferences could be the number of complaints filed under existing rules.
During FY1996, 48 complaints were filed with the Department of Labor’s (DoL)
Veterans Employment and Training Service (VETS) which has the responsibility to
investigate. The relatively light caseload does not indicate that veterans widely
believe that their preference rights have been so clearly violated that a formal
complaint is a promising remedy.²⁰
Amending Veterans Preferences:
H.R. 240; S. 1021; and P.L. 105-339
Addressing Perceived Problems with Veterans Preference Law
Proposals to amend veterans preference law arose because of perceptions by
some veterans that at best, federal officials were ignoring preference rights, and at
worst, were acting to disadvantage veterans, precisely because of their veterans
status. As the issue unfolded, these concerns prompted Congress to examine the
claims of veterans advocates that veterans preferences were not working as Congress
intended. These advocates asserted that:
!Veterans did not have sufficient opportunities to apply for all open jobs.
!Veterans with preferences were often improperly passed over for appointment
!Veterans were often treated improperly during Reductions-in-Force
!In cases where veterans rights were ignored, appeals were difficult
!Certain agencies were unnecessarily excluded from preference requirements
H.R. 240, and S. 1021 (originally a companion bill, but later amended), were
developed to address these perceived problems. The House bill addressed these
concerns in several ways. The Senate bill, as amended, retained some of these
features, and added one the House bill did not contain.

Letter to the Chairman of the Subcommittee on Civil Service, from the GAO Associate¹⁹
Director of Federal Management and Workforce Issues, August 1, 1996.
Veterans’ Complaint Case Summary, materials to accompany a briefing of staff of the²⁰
Senate Committee on Veterans Affairs, by Espiridion “Al” Borrego, Assistant Secretary for
the Veterans Employment and Training Service, Department of Labor.

As passed by the House, the original legislation (H.R. 240) proposed to
increase opportunities for veterans to be considered for federal jobs. H.R. 240
proposed to add to opportunities for veterans to secure federal jobs. H.R. 240 would
have increased veterans’ job opportunities by requiring agencies to accept
applications from veterans for all open jobs, and by expanding the number of
agencies required to grant preferences to veterans.
As enacted, P.L. 105-339 provides some expanded opportunity for veterans to
apply for jobs, but the new right is restricted to those jobs open to outside applicants.
Expands opportunities to apply for positions. Under H.R. 240, the definition
of a preference-eligible veteran was to be amended to add, for veterans with at least
3 years of active military service, the right to apply for positions currently open only
to persons already employed within the federal agency posting the position, or with
“status” attained as a former employee within that agency. These veterans might not
have campaign medals or wartime service, a requirement for preferences for most
nondisabled veterans under current law.
Before reporting S. 1021, the Senate Committee on Veterans Affairs eliminated
the provisions expanding the class of veterans eligible for veterans preferences for
federal employment, and the language requiring agencies to accept applications for
all open postings. In floor action before passage, an amendment added a modified
version of the provision expanding opportunities for veterans completing 3 years
active duty, but included postings only open to external applications, thereby
permitting agencies to deny veterans the opportunity to apply for postings restricted
to personnel internal to the agency.
Increases access to information about openings. Under H.R. 240, agencies
would have been required to provide additional information about jobs open to
veterans by reporting all vacancies to OPM. OPM would have been required to
maintain a list of such postings that would become open to applications from
veterans. Positions in the U.S. Postal Service governed by collective bargaining
agreements were exempted from the above provisions of the bill. This provision was
not included in S. 1021 as reported, and is not in P.L. 105-339.
Possible effects of adding application opportunities. Under the House-passed
bill, agencies would have been required to list jobs available to veterans, and would
have been expected to consider the applications of veterans within the pool of all
applicants, even in common situations where budget constraints encouraged agencies
to hire from within their own ranks. Maintaining these separate lists of postings for
which only veterans could apply, but not other applicants from outside the agency,
would have placed some additional administrative burden on agencies.
The number of veterans actually hired because of advantages given to them by
the bill would probably not have been large. The federal appointment process
involves other considerations besides preference rights of veterans, including budget
priorities, current workforce career opportunities, and job specific requirements.
H.R. 240 did not propose changes to the essential element within federal hiring
policy that leaves appointment decisions to managers who must exercise judgment

in final selections, sometimes choosing from among several candidates, each of
whom has different attributes to be considered.
To the extent that the legislation’s provisions encouraged additional applications
to be submitted by veterans for positions to which they would have little chance of
being appointed, the net result of expanding opportunities could be one of marginally
increased veteran dissatisfaction with federal hiring policy, rather than significantly
more veterans within federal employment.
H.R. 240 would have added retention protection. P.L. 105-339 does not
contain these provisions. Under H.R. 240, veterans would be given additional
protections during RIFs. The provisions were eliminated by the Senate Committee,
and the enacted legislation does not contain these provisions. The House-passed bill
would have:
Prohibited “single-position” competitive levels. Current law permits an agency
to define a competitive level as applicable to one position for RIF purposes; H.R. 240
would have prohibited agencies from applying this classification to positions
occupied by veterans.
Expanded “bump” and “retreat” rights. Preference-eligibles would have been
permitted to displace persons in a wider range of positions than is permitted under
current law. Under H.R. 240, a preference-eligible veteran would have been given
the right to any position at the same grade level in the agency (in the same
commuting area) that was currently held by someone who had been in the position
less than 6 months (or 12 months if the person in the position came from the same
competitive level), and if “a reasonable person could conclude that the preference
eligible would be able to perform [the position’s] functions successfully within a
period of 150 days.”
Established agency Priority Placement Programs (PPPs). Each agency would
have been required to establish a PPP, which would develop rosters of employees
with high-priority re-employment rights because of being displaced from an agency
job. These employees would have been eligible for assignment to open agency jobs
within the commuting area in which the RIF occurs, and before the agency could fill
them from outside the agency. In addition, employees could select other geographic
areas in which their re-employment rights under the PPP could apply. Preference-
eligible veterans would have been given higher priority for vacancies in the agency
than nonveterans.
Possible effects of the proposed RIF protections. Veterans preferences provide
some degree of protection, but not an absolute shield during RIFs. The retention
order listing the sequence by which workers will be released during a RIF is mostly
an impersonal calculation, and each move made in response to it causes a
recalculation of the positions on the list. Studies show that preference-eligible
veterans are more often retained than nonveterans with similar retention ratings, and
this could reflect the advantages conferred by veterans preferences. Yet, this
objective rating system does not incorporate all relevant components that determine
which employees will ultimately be removed; other more subjective factors can
legally also be taken into consideration when retention orders are developed. H.R.

240 would not have eliminated these subjective factors. Even with passage of the
proposed provisions, RIFs would probably still have exposed some veterans to a loss
of their federal jobs, and in spite of efforts to find other suitable federal employment
for these veterans, some would still have been released.
Both bills expanded appeal rights. Both bills, H.R. 240, and S. 1021 as
reported, contained the provisions for expanded appeal rights. Under the House bill,
the provisions would be extended to the group of preference-eligible veterans, which
the bill expands (as explained above). Under the Senate bill, the rights would be
extended only to those veterans currently eligible for preferences. The bill as
enacted, contains the Senate provisions. P.L. 105-339 expands appeal rights in the
following ways:
Expands the role of Department of Labor in examining veterans appeals.
Under prior law, OPM advised agencies as to the proper preference rules when
veterans filed complaints, but compliance was left to agencies. The new law requires
the Veterans Employment and Training Service (VETS) at DoL to investigate
veterans’ complaints, and enforce compliance where warranted. The VETS is
expected to resolve the complaint, if possible, but within 60 days the veteran could
notify VETS of an intention to appeal the agency action in question to the Merit
Systems Protection Board (MSPB).
Adds additional appeal opportunities. Under prior law, only employees
separated during a RIF could appeal a decision concerning the proper application of
veterans preferences to the MSPB. New law permits veterans to appeal personnel
decisions in which they believe their status as a veteran (or their right to veterans
preferences) has been improperly considered, to MSPB, and after 120 days (but
before MSPB issues a “judicially reviewable” decision), the veteran may terminate
the process and appeal the action in an appropriate federal court. Veterans whose
complaints about veterans preference rights are validated could be compensated for
loss of wages or benefits, and could be reimbursed for attorney’s fees.
Possible effects of expanding appeal rights. Error is possible whenever human
judgement is required, and some occasions will predictably arise in which veterans
rights are not properly considered. New redress procedures provided by the new law
give veterans additional ways to challenge and appeal actions taken that they believe
are improperly adverse to their interests as veterans with earned rights to preferential
treatment. The changes may be of value to veterans, but will not necessarily resolve
every dispute to the satisfaction of veterans. Note that veterans are not appealing
decisions in large numbers at the current time.
The legislated added provisions to improve compliance. In addition to being
treated as a right earned through military service, preference rights were made
comparable to protected class (status) rights that must be recognized throughout the
personnel system. New law:
Establishes denial of veterans preference rights as a prohibited personnel
practice. Federal officials are prohibited from denying the preference rights of
eligible veterans in the same way in which such officials are prohibited from denying
fair treatment to individuals because of race, color, religion, or national origin.

Establishes penalties for officials who deny veteran rights. Officials who are
found to have intentionally violated veterans preference requirements may be subject
to penalties.
Possible effects of provisions to improve compliance. Officials responsible for
properly complying with veterans preference requirements will be made more clearly
aware that fostering noncompliance can lead to adverse consequences. Even before
enactment of P.L. 105-339, various penalties could be applied to federal officials who
ignored requirements to perform their hiring responsibilities according to federal
policy and regulations. How much additional notice and penalties will alter officials’
behavior is difficult to gauge.
The legislation expands coverage to other agencies. The new law expands
the application of veterans preferences to include certain jobs in the White House, the
legislative branch, and the judicial branch. In addition, the legislation extends the
RIF protections provided by existing veterans preferences to the Federal Aviation
Administration which, under prior law, was required to grant preference rights only
with respect to hiring decisions. The legislation requires these parts of the
government to broadly comply with veterans preference requirements, but provides
exclusions for political appointments and special appointment requirements. P.L.
105-339 leaves interpretation, application, and compliance up to internal mechanisms
for the legislative and judicial Branches.
Possible effects of expanding veterans preferences to other agencies. Positions
exempted from veterans preference requirements often have special characteristics
that place additional responsibilities on hiring officials to select from among
applicants according to those specific characteristics. Some veterans may be added
as a result of the legislation, but in general, these special characteristics will continue
to govern when it would be appropriate to apply veterans preferences to open
positions. There is no evidence that veterans were systematically excluded from
these positions under existing law, or that their numbers were disproportionately
lower than in other federal agencies.
P.L. 105-339 expanded coverage to federal contractors. Under prior law,
special disabled veterans (as defined in the section Application of Veterans
Preferences, above) and veterans who served in the Vietnam Era (defined in law as
service anytime during the period beginning February 28, 1961 and ending May 7,
1975), were entitled to special consideration when applying for jobs with contractors
having contracts with the federal government totaling $10,000 or more. These
contractors were required to maintain “affirmative action” plans for preference-
eligible veterans, and to report annually on their plans, and the number of veterans
the plans assisted. Veterans believing a contractor had not complied with the
preference requirements could file a complaint with the Department of Labor, which
had a responsibility to investigate the claim and take appropriate action to resolve it
within the requirements of the law.
P.L. 105-339 contains language extending the concept to veterans of the Persian
Gulf War, which the legislation defines as the period beginning August 2, 1990 and
ending January 2, 1992. The plateau making contractors subject to the preference
conditions was raised from $10,000 to $25,000. Contractors are required to report

the maximum and minimum number of its employees, and the total number of
veterans the contractor employs. Agencies are prohibited from contracting with
contractors who do not comply with the reporting requirements.
Action on H.R. 240 and S. 1021
H.R. 240 was introduced early in the 1st Session of the 105 Congress, and^th
hearings were held in the Subcommittee on Civil Service of the Committee on
Government Reform and Oversight, February 26, 1997. The bill, with 26
cosponsors, was reported to the House, March 12, 1997. H.R. 240, which was
similar to a bill that passed the House during the 104 Congress, passed the House^th
on April 9, 1997 by voice vote.
In the Senate, H.R. 240 was referred to the Committee on Veterans Affairs, as
was the similar bill, S. 1021, which had 18 Senate cosponsors. The Senate Veterans
Affairs Committee held a hearing on the two bills on March 24, 1998.
On July 28, 1998, the Committee ordered reported S. 1021, with an amendment
stripping the section that expanded the opportunity for veterans to apply for all open
jobs. Also removed was the section expanding job protections during RIFs. The
redress procedures in H.R. 240 were retained, and the Committee added a new
section that gives preference rights to Persian Gulf War veterans when they sought
employment with contractors whose federal contracts exceeded $25,000 per year.
Such a preference already existed for Vietnam Era veterans (see above).
On September 21, 1998, the Committee reported the bill, and on October 5,
1998, S. 1021 was brought before the Senate, with an amendment proposed by the
Chairman of the Senate Committee on Veterans Affairs, Senator Arlen Specter of
Pennsylvania. The amendment, adopted by unanimous consent, restored some
aspects of the provisions of H.R. 240 that gave the right to apply for all open postings
to veterans of three years active duty. Under the amendment, the right was limited
to jobs for which the posting agency would be accepting outside applications, and
jobs restricted to employees within the agency would remain closed to outside
applicants, including veterans with preference rights.
Veterans service organizations supported the legislation, and testified in its
behalf. The Administration endorsed the concept of refining veterans preference law,
but in hearings on the two bills, Administration spokesmen disagreed with the
critique of current policy that some advocates of the legislation presented. Some
federal employee organizations testified that some aspects of H.R. 240 would run
contrary to the interests of various categories of nonveteran federal workers they
represented. There was no apparent organized opposition to S. 1021, as amended