DHS’s Max-HR Personnel System: Regulations on Classification, Pay, and Performance Management Compared With Current Law, and Implementation Plans

Congressional research reportMay 4, 2007

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Order Code RL32261

DHS’s Max-HR Personnel System: Regulations

on Classification, Pay, and Performance

Management Compared With Current Law, and

Implementation Plans

Updated May 4, 2007

Barbara L. Schwemle

Analyst in American National Government

Government and Finance Division

DHS’s Max-HR Personnel System: Regulations on

Classification, Pay, and Performance Management

Compared With Current Law, and Implementation Plans

Summary

The most recent legislative development on the implementation of a new

personnel system at the Department of Homeland Security (DHS) is that H.R. 1684,

DHS Authorization Act for FY2008, as ordered to be reported by the House

Committee on Homeland Security on March 28,2007, would repeal the authority for

that system. The bill is expected to be considered by the House in early May 2007.

The DHS Secretary and the Director of the Office of Personnel Management

were authorized to prescribe joint regulations for a new human resources

management system for DHS employees with the enactment of P.L. 107-296, the

Homeland Security Act of 2002. The final regulations for that system, called MaxHR, were published in the Federal Register on February 1, 2005. This report

compares the final regulations with current law under Title 5 of the United States

Code and relevant regulations under Title 5 of the Code of Federal Regulations.

Specifically, Subparts A (General Provisions), B (Classification), C (Pay and Pay

Administration), and D (Performance Management) of the final regulations are

examined.

With regard to classification, pay, and performance management, the regulations

prescribe the following. The classification system will organize the department’s

jobs into clusters by major occupational groups. Within each occupational cluster,

open pay bands with no steps will be established. Each pay band typically will have

four levels — entry/developmental, full performance, senior expert, and supervisory.

Employees will progress through a pay band based on performance or enhanced skill

level. The pay system will provide an annual pay adjustment, supplemented by a

locality pay rate or a special pay rate in appropriate circumstances, to employees who

meet or exceed performance expectations. In addition, employees in a Full

Performance or higher pay band may receive a performance-based pay increase,

based primarily on accomplishing work assignments and achieving results.

Employees will not lose pay upon their transition to the pay system. The

performance management system ties employee performance appraisal to the DHS

mission and to specific performance standards based on job assignments. Quotas or

forced distributions will not be imposed on the performance ratings. A Homeland

Security Compensation Committee, chaired by the DHS Undersecretary for

Management, will provide options and/or recommendations to the Secretary on

various strategic compensation matters, including the annual adjustment of rate

ranges and locality and special pay rate supplements for the department’s employees.

The committee will have 14 members, four of whom will represent labor

organizations granted national consultation rights. The regulations provide broad

policy parameters. DHS will issue implementing directives to provide the details of

these policies. The directive on performance management was published on March

23, 2006. Directives on other aspects of the new system are in development. MaxHR is expected to be implemented in phases beginning in early 2007, with the first

performance-based pay adjustments being granted in January 2008.

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

FY2008 Budget and Personnel Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Legislation Pending in the 110th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Subpart A — General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Subpart B — Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Classification Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Classification Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Transitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Subpart C — Pay and Pay Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Overview of Pay System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Setting and Adjusting Rate Ranges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Locality and Special Rate Supplements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Performance-Based Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Pay Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Special Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Transitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Subpart D — Performance Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

List of Tables

Table 1. Views of DHS and OPM Representatives on Selected Policies

in the Final Regulations on Max-HR as Expressed at Senate

and House Subcommittee Hearings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Table 2. Office of Human Capital (OHC) Appropriations, FY2005-FY2008 . . 10

Table 3. Department of Homeland Security Human Resources

Management System: Final Regulations Compared With

Current Law/Selected Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

DHS’s Max-HR Personnel System:

Regulations on Classification, Pay, and

Performance Management Compared With

Current Law, and Implementation Plans

Introduction

President George W. Bush signed the Homeland Security Act of 2002 on

November 25, 2002, and it became P.L. 107-296. Title VIII, Subtitle E, Section 841

of the law amends Title 5 United States Code by adding a new Chapter 97 —

Department of Homeland Security (DHS) to Part III, Subpart I. The new §9701(a)

provides that, notwithstanding any other provision of Part III, the Secretary of

Homeland Security may, in regulations prescribed jointly with the Director of the

Office of Personnel Management (OPM), establish, and from time to time adjust, a

human resources management (HRM) system for some or all of the organizational

units of the Department of Homeland Security. The law states specific requirements

for the HRM system.1

On February 20, 2004, DHS and OPM jointly published a proposed rule to

implement a new HRM system for DHS in the Federal Register.2 The final rule for

that system, called Max-HR, was published in the Federal Register on February 1,

2005.3 The design process that culminated in the proposed rule for the new system

was discussed in the rule’s background section.4 Briefly, a design team, composed

of DHS program managers, union and employee representatives, DHS and OPM

human resource specialists, and private sector experts, conducted research and

meetings in the field to compile options for the new system. A senior review

committee, composed of DHS and OPM top management officials, major union

leaders, and several experts from academia, developed the options for consideration

by the DHS Secretary and the Director of OPM and their senior staff.

See CRS Report RL31500, Homeland Security: Human Resources Management, by

Barbara L. Schwemle.

U.S. Department of Homeland Security and U.S. Office of Personnel Management,

“Department of Homeland Security Human Resources Management System,” Federal

U.S. Department of Homeland Security and U.S. Office of Personnel Management,

“Department of Homeland Security Human Resources Management System,” Federal

“Designing Options for a New HR System,” in February 20, 2004, proposed rule, op. cit.,

pp. 8031-8035.

CRS-2

Broad policy parameters are provided in the final regulations. The details of

these policies will be included in implementing directives to be issued by DHS. On

March 23, 2006, the directive on performance management was published.

Directives on other aspects of the new system are in development. The final

regulations include the following information on classification, pay, and performance

management.

Classification. The department’s jobs will be organized into clusters

by major occupational groups. The current 15 grades and ten steps

of the General Schedule pay system will be abolished and replaced,

within each occupational cluster, by open pay bands without steps.

There typically will be four levels — entry/developmental, full

performance, senior expert, and supervisory — for each pay band.

Salaries within the pay bands will be set based on mission

requirements, labor market conditions, availability of funds, pay

adjustments received by other federal employees, and any other

relevant factors. Employees will progress through a pay band based

on performance or enhanced skill level.

Pay Adjustments. For each occupational cluster, there will be an

annual pay adjustment, and locality pay rate and special pay rate

supplements as appropriate, based on mission requirements, labor

market conditions, availability of funds, pay adjustments received by

other federal employees, and any other relevant factors. An

employee must meet or exceed performance expectations to receive

these pay adjustments. In addition, employees with a high level of

performance that supports the accomplishment of the department’s

mission may receive a performance-based pay increase; higher

increases would go to outstanding performers. The pay-outs for pay

adjustments and awards will depend on DHS’s funding. The

formula that will be used to determine the size of performance-based

pay adjustments has not yet been defined. Employees will not lose

pay as they transition to the new system. The DHS Undersecretary

for Management will chair a Homeland Security Compensation

Committee which will provide options and/or recommendations to

the Secretary on various strategic compensation matters, including

the annual adjustment of rate ranges and locality and special pay rate

supplements for the department’s employees. Of the committee’s 14

members, four will represent labor organizations granted national

consultation rights.

Performance Management. Appraisal of employee performance will

be tied to the DHS mission and to specific performance standards

based on job assignments. Generally, three or four rating levels will

be established. The system will not have quotas or forced

distributions of performance ratings. Managers and supervisors will

be trained to appraise employee performance. The directive on

performance management published on March 23, 2006, identifies

these core competencies: (1) achieving results, (2) technical

proficiency, (3) customer service (except for positions in the 1811

CRS-3

and 1896 series), (4) teamwork/cooperation, (5) communications,

and (6) representing the agency. Managers and supervisors have

additional core competencies on assigning, monitoring, and

evaluating work, and leadership. The directive provides for four

rating levels — “Achieved Excellence,” “Exceeded Expectations,”

“Achieved Expectations,” and “Unacceptable.”5

The Senate Subcommittee on Oversight of Government Management, the

Federal Workforce, and the District of Columbia of the Committee on Homeland

Security and Governmental Affairs, and the House Subcommittee on the Federal

Workforce and Agency Organization of the Committee on Government Reform

conducted hearings on the final regulations shortly after they were published. The

testimony of Ronald James, then-Chief Human Capital Officer at DHS, and Ronald

Sanders, then Associate Director for Strategic Human Resources Policy at OPM, and

their written responses to questions for the hearing record provide additional

information about the policies embodied in the final regulations. Table 1 below

presents the views of Mr. James and Mr. Sanders as stated for the February 10, 2005,

Senate subcommittee hearing and the March 2, 2005, House subcommittee hearing

on issues related to classification, pay, and performance management.

Table 1. Views of DHS and OPM Representatives on Selected

Policies in the Final Regulations on Max-HR as Expressed at

Senate and House Subcommittee Hearings

Issue

Views

Senate Subcommittee on Oversight of Government Management, the Federal

Workforce, and the District of Columbia of the Committee on Homeland Security and

Governmental Affairs Hearing

job classification

“DHS will establish definitions for a small number

of broad pay bands (typically 4-5), within

occupational clusters. Grading criteria will be

developed for these broad pay bands that will

specify the type and range of difficulty and

responsibility, qualifications, competencies, or

other characteristics of the work encompassed by

the band ... allow[ing] us to describe a range of

work ...” (James and Sanders, same written

response)

performance evaluations

“OPM (or OPM and DHS) will treat performance

evaluations for DHS employees under 5 U.S.C.

chapter 97 as personnel actions for purposes of

enforcing the ban against prohibited personnel

practices under 5 U.S.C. §2302.” (Sanders, written

response)

U.S. Department of Homeland Security, Management Directives System, Performance

Management, MD Number 3181, March 23, 2006. Provided to CRS by electronic mail, by

Human Resources staff at DHS, March 27, 2006.

CRS-4

Issue

Views

pass/fail system for rating

performance

“my personal professional judgment is ... that we do

not want to use pass/fail anywhere beyond the entry

level, the training level, and the school level.”

(James, oral response)

annual pay adjustments

“DHS will have the following type of annual pay

adjustment features: market-based pay which will

be based on a market survey approach; Locality

Rate Supplements which will be based on the cost

of labor at different localities or geographic areas;

and performance based pay increases which will be

based on individual performance. The DHS

compensation plan will also offer a special rate

supplement which will provide a higher pay level

for subcategories of employees within an

occupational cluster if warranted by current or

anticipated recruitment or retention needs.” (James,

written response)

locality pay

“DHS will have greater flexibility in setting

[locality rate supplements] based on labor market

conditions and other factors .... DHS may provide

for different locality rate supplement percentages

for different occupational categories and different

band levels.” (James, written response)

Homeland Security

Compensation Committee

(HSCC)

“The HSCC will be an advisory body to the

Secretary for making annual recommendations

regarding strategic pay decisions such as budget

allocation for market and locality adjustments and

aggregate review of performance ratings and

performance payouts. The HSCC will also

recommend process improvements or policy

changes to improve program effectiveness. The

Secretary or designee will make final decisions.

We appreciate the suggestion to publish internally

the overall results of performance management

decisions and will consider doing so ...” (James,

written response)

CRS-5

Issue

performance appraisal of

managers

Views

“[E]ach manager’s goals will be based on his or her

manager’s goals, thus creating a ‘line of sight’

cascade that starts with the Secretary and his direct

reports and is repeated through the chain, creating

subsets of goals that all point to the Department’s

mission objectives. With this cascade comes

responsibility and accountability for managers to

not only set appropriate goals, but to actually

nurture their employees to achieve success.

Because employees’ goals will be tied directly to

their manager’s goals, the manager’s success is tied

to how well employees perform. And finally,

managers will also be assessed on their

management skills ... including their ability to

justify and stand behind pay decisions. Employee

climate surveys and use of 360 degree performance

appraisal systems are being seriously considered ...

to ensure that employees have a voice in providing

feedback on how well their leaders are leading ...”

(James, written response)

House Subcommittee on the Federal Workforce and Agency Organization of the

Committee on Government Reform Hearing

communication of core

competencies

“We are not considering amending the regulations

to provide that core competencies be communicated

in writing. During the meet-and-confer process, the

participating labor organizations agreed that

performance expectations (including core

competencies) need not be in writing ....

performance expectations, including those that may

affect an employee’s retention in the job, must be

communicated to the employee prior to holding the

employee accountable for them.” (James, written

response)

performance management

system

“We will emphasize a greater role for Departmental

leaders in ensuring mission and individual goal

alignment and holding individual employees

accountable for results and ensuring that

compensation decisions are driven by performance

.... employees along with their supervisor will work

together to align their individual goals with the

larger goals of the Department. By setting specific

milestones and creating a direct line of sight

between individual jobs and mission-achievement

there will be a clear picture of what is expected

during the performance cycle.” (James, written

response)

CRS-6

Issue

Views

mathematical formula for

performance payouts

“There are four variables ... performance rating, pay

pool and the dollars in the pay pool, and the ratings

distribution ... let us focus on those people who

‘meet expectations,’ ‘exceed expectations,’ and

who are ‘outstanding’ .... Each of those

[performance] ratings has a point value. That point

value is established at a higher headquarters

through oversight of the Compensation Committee.

The funding in that pay pool is also established at a

higher headquarters with oversight from the

Compensation Committee. You simply take the

rating, multiply it times the point value, and divide

the points into the dollars, and you get your share of

the pool.... The regulations absolutely positively bar

and prohibit forced distributions of ratings. You

can’t bust the budget because the pool is finite. You

simply divide the available dollars in the pool

amongst the employees based on their rating. And

the amount in the pool, the amount of the

Department’s payroll that will go to performance

pay is set by the Secretary on the advice and input

of the Compensation Committee, four members of

which are from the Department’s two major unions

... they will determine how much of the

Department’s annual appropriations increase in

payroll goes to performance, the national market

adjustments and local market adjustments.

Secretary reserves the right to make final

decisions.... They will decide how that is divided up

by location and occupation and how much goes into

the performance pay pool....” and later, “There is

enough in the performance pay pool to make sure

that fully successful employees get shares that are

worth something, those who exceed expectations

get shares that are worth more, and those that are

outstanding get even more.”

(Sanders, oral responses)

an employee who receives an

“unacceptable” performance

rating

“If the employee is at the minimum level of pay, he

or she is unacceptable and everybody else in the

pay range goes up because they get across-theboard increases, the regulations require

management to take action in 90 days .... Either the

employee’s performance improves and they move

back up into the range with everyone else, or the

Department either demotes or removes the

employee.” (Sanders, oral response)

CRS-7

Issue

Views

employee understanding of the

pay system

“will be measured through periodic employee

attitude surveys .... Fair administration and

meaningful performance adjustments will be

gauged both by these surveys and by periodic

quantitative analyses of pay adjustments data

(ratings given by managers and amounts of

increases throughout the department) ... as well as

review of payout information by the DHS

Compensation Committee.” (James, written

response)

prohibition on forced

distributions or quotas

“DHS will conduct ongoing evaluations .... DHS

will deploy an automated performance management

system ... will include a reporting feature that will

provide the capability to produce standard reports

that will identify trends and detect patterns in

distribution that indicate forced distribution

curves.” (James, written response)

Sources: U.S. Congress, Senate Committee on Homeland Security and Governmental Affairs,

Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of

Columbia, Unlocking the Potential Within Homeland Security: The New Human Resources System,

hearing, 109th Cong., 1st sess., Feb. 10, 2005 (Washington: GPO, 2005), pp. 17, 313, 318, 320, 321,

326, and 327. U.S. Congress, House Committee on Government Reform, Subcommittee on the

Federal Workforce and Agency Organization, The Countdown to Completion: Implementing the New

Department of Homeland Security Personnel System, hearing, 109th Cong., 1st sess., Mar. 2, 2005

(Washington: GPO, 2005), pp. 102, 108, 109, 219, 220, 224, 225, and 227. The views expressed

in the table are those of Ronald James, then-Chief Human Capital Officer at DHS, and Ronald

Sanders, then-Associate Director for Strategic Human Resources Policy at OPM.

Implementation

According to a DHS and OPM Fact Sheet on the final regulations, the new

HRM system will cover about 110,000 of the department’s 180,000 employees.6

Transportation Security Administration (TSA) employees, Inspector General

employees, and employees appointed under the Robert T. Stafford Disaster Relief

and Emergency Assistance Act will not be covered by the system. The Secret

Service is excluded from the labor-management relations provisions and its

Uniformed Division employees are not covered by the classification and pay

provisions. Blue-collar employees under the wage grade system are excluded from

the classification and pay provisions during the initial implementation of the system.

Members of the Senior Executive Service (SES) are covered by the government-wide

pay-for-performance system.

At the time that the final regulations were published in February 2005, a phased

implementation of Max-HR according to the following timetable was envisioned:

U.S. Department of Homeland Security, DHS and OPM Final Human Resource

Regulations Fact Sheet, January 26, 2005.

(Available on the Internet at

[http://www.dhs.gov], visited March 24, 2006.)

CRS-8

Time Period

Implementation Steps

Early in 2005

Communication outreach begins; Detailed design work,

including collaboration with employee representatives;

Meetings and focus groups held around the country.

Spring 2005

Training of managers and supervisors begins; The labor

relations and adverse actions and appeals provisions

become effective.

Summer 2005

Managers, supervisors, and employees receive performance

management training.

Fall 2005

The performance management process begins.

Early 2006

DHS Headquarters, Information Analysis and Infrastructure

Protection, Science and Technology, Emergency

Preparedness and Response, and Federal Law Enforcement

Training Center are converted to the new pay system. The

first rate range adjustment and performance pay-out is

scheduled for January 2007.

Early 2007

U.S. Secret Service and U.S. Coast Guard (USCG) are

converted to the new pay system. The first rate range

adjustment and performance pay-out is scheduled for

January 2008. (The USCG performance pay-out is

scheduled for Summer 2008.)

Early 2008

U.S. Customs and Border Protection, U.S. Immigration and

Customs Enforcement, and U.S. Citizenship and

Immigration Services are converted to the new pay system.

The first rate range adjustment and performance pay-out is

scheduled for January 2009.

This timetable has since been revised. In early September 2005, DHS

announced in the department’s newsletter that the employees who were initially

scheduled to move into Max-HR in early 2006 would instead do so in early 2007, at

the same time that the U.S. Secret Service and USCG employees are scheduled to

join the new system. The first rate range adjustment and performance pay-out for

these employees would be granted in January 2008. The remainder of the

implementation schedule was expected to remain the same. Commenting on the

revised schedule, Colleen M. Kelley, president of the National Treasury Employees

Union, stated that “leaving the rest of the calendar on the back end unchanged”

means that “DHS will be moving a larger number of employees into the pay system

at the same time, losing the advantages of a phased approach.” She called for “a delay

of the entire rollout.”7 The DHS Secretary is required by P.L. 109-295 to report to

Louis C. LaBrecque, “DHS to Delay Implementation of MaxHR Pay System; Labor Battle

Continues,” Government Employee Relations Report, vol. 43, September 13, 2005.

CRS-9

the House and Senate Committees on Appropriations in January 2007 on an updated

plan for Max-HR (see the “Funding” section below.)

In his report to DHS employees on the agency’s results agenda, the Secretary of

Homeland Security, Michael Chertoff, stated that training and communications will

be ongoing as Max-HR becomes operational. During FY2006, among other

initiatives, the effectiveness of the department’s training was to be evaluated, gaps

in employee competencies were to be further defined and addressed, and

opportunities for employees to develop their leadership capabilities were to be

enhanced.8

On December 9, 2006, the Senate, by voice vote, confirmed Paul A. Schneider

to be the new Undersecretary for Management at DHS. (The previous

undersecretary, Janet Hale, who had been with DHS since its founding, left the

department in late May 2006.) During the Senate Committee on Homeland Security

and Governmental Affairs hearing on his confirmation, he reportedly assured Senator

Susan Collins that DHS officials would create “an effective method of evaluating

employees’ job performance and would work with unions on structuring the pay

aspects as well as grievance procedures” of Max-HR.9

Funding.10 The President’s FY2007 budget requested an appropriation of

$71.449 million to fund Max-HR, $41.749 million more than the amount provided

in FY2006. The full time equivalent (FTE) employees attached to the account were

27, an increase of 15 FTEs over FY2006. Almost 94% of the requested money was

for salaries and benefits ($3.153 million) and advisory and assistance services

($63.984 million). Accounting for the increased funding were (1) implementation

costs of the new pay system for employees who were originally scheduled to be

converted in FY2006 ($15 million), (2) implementation and operational costs for a

market- and performance-based compensation system in FY2007 ($22 million), and

(3) funding the Homeland Security Labor Relations Board (HSLRB) ($4.749

million).11 P.L. 109-295, the Department of Homeland Security Appropriations Act

for FY2007, provides funding of $25 million for Max-HR (some $46.449 million

below the President’s request).

U.S. Department of Homeland Security, Securing the Success of DHS Results, 2005, p. 14,

available at [http://www.dhs.gov], visited March 24, 2006.

Stephen Barr, “Personnel Policy Challenges Await the New DHS Management Chief,” The

Washington Post, December 14, 2006, p. D4.

For an analysis of the FY2007 appropriations for Max-HR, see the “Personnel Issues”

section of CRS Report RL33428, Homeland Security Department: FY 2007 Appropriations,

coordinated by Jennifer E. Lake and Blas Nunez-Neto. For the FY2006 appropriations, see

the “Personnel Issues” section of CRS Report RL32863, Homeland Security Department:

FY2006 Appropriations, coordinated by Jennifer E. Lake and Blas Nunez-Neto.

U.S. Department of Homeland Security, FY2007 Congressional Justification,

Departmental Management and Operations, Under Secretary for Management, Office of

Human Capital and Office of Human Capital — MaxHR, pp. USM-43 - USM-50.

CRS-10

FY2008 Budget and Personnel Issues

The Office of Human Capital (OHC) at DHS reports to the Under Secretary for

Management, and its appropriation is included in that of the Under Secretary. The

OHC appropriation has two parts. The first part, formerly labeled “HR Operations”

and now labeled “OHC,” includes funding for the office which is responsible for the

overall management and administration of human capital in DHS. As such, the

office establishes policy and procedures and provides oversight, guidance, and

leadership for the department’s human resources functions. The second part, formerly

labeled “MaxHR” and now labeled “OHC — Operational Initiatives and HR

Management System,” includes funding for the OHC organization, which “is

responsible for creating, implementing, and operating DHS’ new human resources

system, ensuring that organizational goals and individual work performance are

linked, and that employees are compensated based on their contributions to agency

performance.” The OHC organization also “is responsible for ensuring that DHS

recruits, hires, trains, and retains the very best workforce, provides the highest quality

leadership development, and creates a performance culture in the workforce to ensure

DHS succeeds in its mission.”12 Table 2 below shows the funding and staff for the

OHC from FY2005 through the budget request for FY2008.

Table 2. Office of Human Capital (OHC) Appropriations,

FY2005-FY2008

(in millions)

Account

FY2005

Enacted

FY2006

Enacted

FY2007

Enacted

FY2008

Request

FY2008

Request

Compared

to FY2007

Enacted

“OHC”

(formerly “HR

Operations”)

$10

“OHC —

Operational

Initiatives and

HR Management

System”

(formerly

“MaxHR”)

$36

$30

$25*

$15

-$10

Total

$43

$39

$34

$25

-$9

Staffing (full

time equivalent,

FTE, positions)

(12 for

“MaxHR”)

Note: This amount does not reflect the transfer of $5 million from “MaxHR” to the Transportation

Security Administration as provided by Section 21101 of P.L. 110-5, the Revised Continuing

Appropriations Resolution for FY2007, enacted on Feb. 15, 2007, (121 Stat. 8). The numbers in the

table are rounded.

FY2008 DHS Justifications, Departmental Management and Operations, Undersecretary

for Management, p. USM-2.

CRS-11

Sources: P.L. 108-334, Oct. 18, 2004, 118 Stat. 1298; P.L. 109-90, Oct. 18, 2005, 119 Stat.

2064; P.L. 109-295, Oct. 4, 2006, 120 Stat. 1355, at 1356, and FY2008 DHS Justifications,

Departmental Management and Operations, Undersecretary for Management, Office of Human

Capital, and Office of Human Capital — Max-HR, pp. USM-39 - USM-44.

As directed by the conference report13 accompanying P.L. 109-295, the

Department of Homeland Security Appropriations Act for FY2007, the Under

Secretary for Management submitted an expenditure plan for the DHS Human

Resources Management System (HRMS) (formerly “MaxHR”) for FY2007 to the

House and Senate Committees on Appropriations on February 1, 2007. The report’s

cover letter states that in FY2007 the HRMS “will be broadened ... to encompass

additional aspects of FY2007 Human Capital Operational Plan (HCOP), including

an increased focus on employee recruiting and advanced homeland security related

education.”14 Among other data, the report states that the contractor Northrop

Grumman Information Technology (NGIT) received a contract worth almost $3

million dollars to provide services through January 31, 2007, related to program

management; pay, performance, and classification; and training, communications,

and organizational change management at DHS. According to the report, NGIT is

being awarded another contract, worth more than $16 million, to provide services to

the department through September 30, 2007, in the same areas identified above and

labor relations.15

The transfer of the Office of Federal Law Enforcement Training Accreditation

(FLETA) from the Federal Law Enforcement Training Center to the OHC accounts

for the increase of $1 million and seven full-time equivalent employees over the

FY2007 appropriation for the “OHC” account. Almost 93% of the money requested

for FY2008 under this account is for salaries and benefits ($8 million) and advisory

and assistance services ($2 million) that includes services acquired by contract from

non-federal sources.16 The appropriation will fund continued implementation of the

Human Capital Operational Plan for FY2007 to FY2009, development of an

employee talent bank for use throughout the department, creation of standards to

assess and evaluate learning and development programs, and participation of all new

DHS employees in a department-wide orientation program.17 Some 76% of the

money requested for FY2008 under the “OHC — Operational Initiatives and HR

Management System” account is for advisory and assistance services ($11 million).

U.S. Congress, Conference Committees, 2006, Making Appropriations for the Department

of Homeland Security For the Fiscal Year Ending September 30, 2007, and For Other

Purposes, conference report to accompany H.R. 5441, 109th Cong., 2nd sess., H.Rept. 109699 (Washington, DC: GPO, 2006), p. 119.

Letter to Representative David E. Price, Chairman, House Subcommittee on Homeland

Security of the House Committee on Appropriations from Paul A. Schneider, Under

Secretary for Management, U.S. Department of Homeland Security, February 1, 2007.

Report to Congress, Spend Plan for MaxHR, Office of Human Capital, Department of

Homeland Security, January 4, 2007, p. 7. Accompanied the letter cited in footnote 5.

FY2008 DHS Justifications, Departmental Management and Operations, Undersecretary

for Management, Office of Human Capital, pp. USM-39 - USM-41.

FY2008 DHS Justifications, Under Secretary for Management, Strategic Context, p.

USM-3.

CRS-12

No funding is requested for salaries and benefits.18 The appropriation will fund

continued training of the DHS workforce in pay for performance and a new pay

system pilot project that will cover employees in the department who work in the

intelligence area. The pilot will be implemented jointly with the Director of National

Intelligence who is developing a pilot pay system for employees of the intelligence

agencies. It also will fund investment in recruitment and retention programs along

with learning and development initiatives to address gaps in skills and competencies,

and deployment of career paths and rotations to facilitate the mobility of DHS

employees through various leadership positions in the department.19

There are new incumbents for both the Under Secretary and Chief Human

Capital Officer positions at DHS. Paul Schneider assumed the former position on

February 1, 2007, and Marta Brito Perez the latter position on September 18, 2006.

During his confirmation hearing on December 6, 2006, Mr. Schneider told the

members of the Senate Committee on Homeland Security and Governmental Affairs

that he would make sure that DHS officials create an effective method of evaluating

employees’ job performance.

In January 2007, the Culture Task Force of the Homeland Security Advisory

Council issued a report to the DHS Secretary. Among its recommendations were that

DHS staff be referred to as “employees” or “members” of DHS and not as “human

capital,” and that “members of the headquarters” be required to visit and listen “to

employees and engage and support groups outside the headquarters” and respond

within 30 days on actions taken to address their concerns.20 The task force believes

that “there can be no hierarchically imposed ‘single culture’ within the Department,”

but that “an overarching and blended culture can be developed that is based on

threads of common values, goals, and focus of mission among DHS headquarters and

its component organizations.” With regard to developing and sustaining such a

culture, the task force advised that “there are organizations in the Private Sector that

will deploy and embed within DHS qualified, objective, emotionally and

organizationally detached personnel to help develop the leadership’s vision and

strategic goals of creating a Homeland Security (rather than DHS) Mission Culture

and then monitor, objectively test, and support progress in achieving, continually

improving and sustaining an operationally focused, innovation and people rewarding

FY2008 DHS Justifications, Departmental Management and Operations, Undersecretary

for Management, Office of Human Capital — Max-HR, pp. USM-42 - USM-44.

FY2008 DHS Justifications, Under Secretary for Management, Strategic Context, p.

USM-4. On January 23, 2007, 27 employees in General Schedule grades 14 and 15 and

representing various components of DHS began a year-long fellowship program designed

to prepare them for future leadership positions in the department. The program is intended

to establish a common culture at DHS and encourage cooperation among the different

agencies that comprise the department.

Homeland Security Advisory Council, Report of the Culture Task Force, January 2007,

pp. 2-3. Section 871 of P.L. 107-296 (116 Stat. 2243) authorized the council which provides

advice and recommendations to the DHS Secretary on homeland security matters. In June

2006, Secretary Chertoff directed the council to establish the task force “to provide

observations and recommendations for achieving and maintaining an empowering, energetic,

dedicated, mission-focused culture within the Department ... .”

CRS-13

culture.”21 The task force recommended that such contract employees work under

the direction of a senior (preferably career) DHS employee and with staff from the

department’s component agencies.

Legislation Pending in the 110th Congress

Representative Bennie Thompson introduced H.R. 1684, the Department of

Homeland Security Authorization Act for FY2008, on March 26, 2007. It was

referred to the House Committee on Homeland Security where it was marked up and

ordered to be reported, on a 26-0 vote, on March 28, 2007. During the markup, an

amendment to repeal the authority for the new human resources management system

at DHS that was offered by Representative Sheila Jackson-Lee was agreed to on a 1713 vote. H.R. 1684 is expected to be considered by the House in early May 2007.

This report compares the final regulations for Subparts A (General Provisions),

B (Classification), C (Pay and Pay Administration), and D (Performance

Management) of the Department of Homeland Security’s HRM system with current

law under Title 5 United States Code and relevant regulations under Title 5 Code of

Federal Regulations. For an analysis of the regulations for Subpart E on LaborManagement Relations and the court case which resulted from those rules, see CRS

Report RL32255, Homeland Security: Final Regulations for the Department of

Homeland Security Human Resources Management System (Subpart E) Compared

With Current Law, by Jon O. Shimabukuro; and CRS Report RL33052, Homeland

Security and Labor-Management Relations: NTEU v. Chertoff, by Thomas J. Nicola

and Jon O. Shimabukuro. P.L. 107-296, the Homeland Security Act of 2002,

amended Title 5 provisions that are applicable to most federal employees, and it is

these provisions (rather than those which have been provided in separate statutes to

employees at the Internal Revenue Service, Federal Aviation Administration,

Transportation Security Administration, Department of Defense, and the National

Aeronautics and Space Administration) that are compared with the proposed DHS

regulations.

Ibid., pp. 5-6.

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Table 3. Department of Homeland Security Human Resources Management System: Final Regulations Compared

With Current Law/Selected Regulations

Current Law/Selected Regulations

Title 5 United States Code and

Title 5 Code of Federal Regulations

Final DHS Regulations

Subpart A — General Provisions

5 U.S.C. §9701. Establishment of human resources management

system. (a) Notwithstanding any other provision of this part, the

Secretary of Homeland Security may, in regulations prescribed jointly

with the Director of the Office of Personnel Management, establish, and

from time to time adjust, a human resources management system for

some or all of the organizational units of the Department of Homeland

Security.

§9701.101. Purpose. To establish a system that is mission-centered,

performance-focused, flexible, contemporary, and excellent; that

generates respect and trust through employee involvement; that is based

on the principles of merit and fairness embodied in the statutory merit

system principles; and that complies with all other applicable laws.

Authority derives from 5 U.S.C. §9701(a).

§9701.102. Eligibility and coverage. All DHS civilian employees are

eligible for coverage under one or more subparts of 5 CFR Part 9701

except those covered by a provision of law outside the chapters of Title

5 United States Code identified in §9701.104 which can be waived. For

example Transportation Security Administration (TSA) employees,

employees appointed under the Robert T. Stafford Disaster Relief and

Emergency Assistance Act, Secret Service Uniformed Division

members, Coast Guard Academy faculty members, and Coast Guard

military members are not eligible for coverage under any classification

or pay system established under Subpart B or C. Each subpart provides

specific information regarding coverage.

CRS-15

Current Law/Selected Regulations

Title 5 United States Code and

Title 5 Code of Federal Regulations

Final DHS Regulations

Subpart A becomes applicable to all eligible employees 30 days after

the date of publication in the Federal Register.

With respect to Subparts B, C, and D, the Secretary or designee may, at

his or her sole and exclusive discretion and after coordination with

OPM, apply one or more of these subparts to a specific category or

categories of eligible civilian employees at any time. With respect to

any given category of civilian employees, the Secretary or designee may

apply some of these subparts, but not others, and such coverage

determinations may be made effective on different dates (e.g., in order

to phase in coverage under a new classification, pay, and performance

management system).

DHS will notify affected employees and labor organizations in advance

of the application of one or more subparts to them.

Until the Secretary or designee makes such a determination to apply the

provisions of one or more subparts to a particular category or categories

of eligible DHS employees, those employees will continue to be

covered by the applicable federal laws and regulations that would apply

to them in the absence of 5 CFR Part 9701. All personnel actions

affecting DHS employees must be based on the federal laws and

regulations applicable to them on the effective date of the action.

5 U.S.C. Chapter 53, Subchapter VIII — Pay for the Senior Executive

Service.

Any new DHS classification, pay, or performance management system

covering Senior Executive Service (SES) members must be consistent

CRS-16

Current Law/Selected Regulations

Title 5 United States Code and

Title 5 Code of Federal Regulations

Final DHS Regulations

with the policies and procedures established by the government-wide

SES pay-for-performance system authorized by 5 U.S.C. Chapter 53,

Subchapter VIII, and applicable implementing regulations issued by

OPM. If the Secretary determines that SES members employed by

DHS should be covered by classification, pay, or performance

management provisions that differ substantially from the governmentwide SES pay-for-performance system, the Secretary and the Director

must issue joint regulations consistent with all of the requirements of 5

U.S.C. §9701.

At his or her sole and exclusive discretion, the Secretary or designee

may, after coordination with OPM, rescind the application of one or

more subparts to a particular category of employees and prescribe

implementing directives for converting that category of employees to

coverage under applicable Title 5 provisions. DHS will notify affected

employees and labor organizations in advance of such a decision.

The Secretary or other authorized DHS official may exercise an

independent legal authority to establish a parallel system that follows

some or all of the requirements in 5 CFR Part 9701 for a category of

employees who are not eligible for coverage under 5 U.S.C. §9701.

Authority derives from 5 U.S.C. §9701(a).

§9701.103. Definitions. Various terms are defined, including:

“Authorized agency official” means the Secretary or an official who is

authorized to act for the Secretary in the matter concerned.

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Current Law/Selected Regulations

Title 5 United States Code and

Title 5 Code of Federal Regulations

Final DHS Regulations

“Coordination” means the process by which DHS, after appropriate

staff-level consultation, officially provides OPM with notice of a

proposed action and intended effective date. If OPM concurs, or does

not respond to that notice within 30 calendar days, DHS may proceed

with the proposed action. However, if OPM indicates the matter has

government-wide implications or consequences, DHS will not proceed

until the matter is resolved. The coordination process is intended to

give due deference to the flexibilities afforded DHS by the Homeland

Security Act and the regulations in 5 CFR Part 9701, without

compromising OPM’s institutional responsibility to provide

government-wide oversight in HRM programs and practices.

“Implementing directives” means directives issued at the departmental

level by the Secretary or designee to carry out any policy or procedure

established in accordance with 5 CFR Part 9701. These directives may

apply department-wide or to any part of the department as determined

by the Secretary at his or her sole and exclusive discretion.

5 U.S.C. §2105. Employee.

(a) “Employee” means an officer and an individual who is appointed in

the civil service by one of the following acting in an official capacity —

the President; a Member or Members of Congress, or the Congress; a

member of a uniformed service; an individual who is an employee

under this section; the head of a government controlled corporation; or

“Employee” means an employee within the meaning of that term in 5

U.S.C. §2105. “Secretary” means the Secretary of Homeland Security

or, as authorized, the Deputy Secretary of Homeland Security.

“Secretary or designee” means the Secretary or a DHS official

authorized to act for the Secretary in the matter concerned who serves as

the Undersecretary for Management or as DHS’ Chief Human Capital

CRS-18

Current Law/Selected Regulations

Title 5 United States Code and

Title 5 Code of Federal Regulations

Final DHS Regulations

an adjutant general designated by the Secretary concerned under 32

U.S.C. §709(c). It also means an officer and an individual engaged in

the performance of a federal function under authority of law or an

executive act; and subject to the supervision of an individual named

above while engaged in the performance of the duties of the position.

Officer.

5 U.S.C. §9701. Establishment of human resources management

system.

(b)(c) The HRM system must be flexible and contemporary. It cannot

waive, modify, or otherwise affect:

§9701.104. Scope of authority. Subject to the requirements and

limitations in 5 U.S.C. §9701, these Title 5 chapters and related

regulations may be waived or modified: Chapter 43 (performance

appraisal systems); Chapter 51 (General Schedule (GS) job

classification); Chapter 53 (pay for GS employees, pay and job grading

for Federal Wage System employees, and pay for certain other

employees); Chapter 71 (labor relations); Chapter 75 ( adverse actions

and certain other actions); and Chapter 77 (appeal of adverse actions

and certain other actions).

— the public employment principles of merit and fitness at 5

U.S.C. §2301, including the principles of hiring based on merit,

fair treatment without regard to political affiliation or other nonmerit considerations, equal pay for equal work, and protection of

employees against reprisal for whistleblowing;

— any provision of 5 U.S.C. §2302 relating to prohibited

personnel practices;

— any provision of law referred to in 5 U.S.C. §2302(b)(1)(8)(9);

or any provision of law implementing any provision of law

referred to in 5 U.S.C. §2302(b)(1)(8)(9) by providing for equal

CRS-19

Current Law/Selected Regulations

Title 5 United States Code and

Title 5 Code of Federal Regulations

Final DHS Regulations

employment opportunity through affirmative action; or providing

any right or remedy available to any employee or applicant for

employment in the civil service;

— Subparts A (General Provisions), B (Employment and

Retention), E (Attendance and Leave), G (Insurance and

Annuities), and H (Access to Criminal History Record

Information) of Part III of Title 5 United States Code; and Chapters

41 (Training), 45 (Incentive Awards), 47 (Personnel Research

Programs and Demonstration Projects), 55 (Pay Administration),

57 (Travel, Transportation, and Subsistence), 59 (Allowances), 72

(Antidiscrimination, Right to Petition Congress), 73 (Suitability,

Security, and Conduct), and 79 (Services to Employees) of Title 5;

— any rule or regulation prescribed under any provision of law

referred to in any of the statements in bullets immediately above.

5 U.S.C. §9701. Establishment of human resources management

system.

(h) Effective five years after the conclusion of the transition period

defined under §1501 of P.L. 107-296, all authority to issue regulations

under the section (including regulations which would modify,

§9701.105. Continuing collaboration. Relates to the participation of

employee representatives in developing implementing directives.

CRS-20

Current Law/Selected Regulations

Title 5 United States Code and

Title 5 Code of Federal Regulations

Final DHS Regulations

supersede, or terminate any regulations previously issued under the

section) must cease to be available. The transition period is the 12month period that began on the act’s effective date. The act’s effective

date was 60 days after the act’s enactment date of November 25, 2002.

Authority derives from 5 U.S.C. §9701(a)-(c).

§9701.106. Relationship to other provisions. Title 5, United States

Code, is waived or modified to the extent authorized by 5 U.S.C. §9701

to conform to 5 CFR Part 9701. This part must be interpreted in a way

that recognizes the critical mission of DHS. Each provision must be

construed to promote the swift, flexible, effective day-to-day

accomplishment of the mission, as defined by the DHS Secretary or

designee. The interpretation of the regulations by DHS and OPM must

be accorded great deference.

5 U.S.C. Chapter 43 (Performance Appraisal; Chapter 51

(Classification); Chapter 53 (Pay Rates and Systems); Chapter 71

(Labor-Management Relations); Chapter 75 (Adverse Actions); and

Chapter 77 (Appeals).

For the purpose of applying other provisions of law or Governmentwide regulations that reference provisions under 5 U.S.C. Chapters 43,

51, 53, 71, 75, and 77, the referenced provisions are not waived but are

modified consistent with the corresponding regulations in 5 CFR Part

9701, except as otherwise provided in this part or in DHS implementing

directives. Applications of this rule include, but are not limited to, the

following:

If another provision of law or Government-wide regulations requires

coverage under one of the chapters modified or waived under 5 CFR

CRS-21

Current Law/Selected Regulations

Title 5 United States Code and

Title 5 Code of Federal Regulations

Final DHS Regulations

5 U.S.C. §§4521-4523. Award to Law Enforcement Officers for

Foreign Language Capabilities; 5 U.S.C. §5545b (Pay for firefighters);

5 U.S.C. §5545(d) (hardship or hazard pay differentials); 5 U.S.C.

§§5753-5754 (Recruitment and relocation bonuses and Retention

allowances); 5 U.S.C. §5948 (Physicians comparability allowances);

P.L. 101-509, Sec. 407, 5 U.S.C. §5305 note (Relocation payments for

law enforcement officers);

Part 9701 (i.e., 5 U.S.C. Chapters 43, 51, 53, 71, 75, and 77), DHS

employees are deemed to be covered by the applicable chapter

notwithstanding coverage under a system established under this part.

Selected examples of provisions that continue to apply to any DHS

employees (notwithstanding coverage under Subparts B through G)

include, but are not limited to: foreign language awards for law

enforcement officers; pay for firefighters; differentials for duty

involving physical hardship or hazard; recruitment, relocation, and

retention payments; physicians’ comparability allowances; and the

higher cap on relocation bonuses for law enforcement officers.

Application of the back pay law with regard to attorney fees and labor

relations will be consistent with §9701.706(h) and §9701.517,

respectively.

When a specified category of employees is covered by a classification

and pay system established under Subparts B and C, the following

provisions do not apply: time-in-grade restrictions that apply to

competitive service GS positions; supervisory differentials; and law

enforcement officer special rates and geographic adjustments.

5 CFR Part 300, Subpart F (Time-in-Grade Restrictions); 5 U.S.C.

§5755 (Supervisory differentials); P.L. 101-509, Sec. 404 and 404, 5

U.S.C. 5303 note (Special rates and Special pay adjustments for law

enforcement officers).

42 U.S.C. §2000e (Equal Employment Opportunity); 29 U.S.C. §621

(Age discrimination in employment); 29 U.S.C. §791 (Employment of

individuals with disabilities); 29 U.S.C. §206(d) (Prohibition of sex

discrimination); 29 CFR Part 1614 — Federal Sector Equal

Nothing in this part waives, modifies or otherwise affects the

employment discrimination laws that the Equal Employment

Opportunity Commission (EEOC) enforces under 42 U.S.C. §2000e et

seq., 29 U.S.C. §621 et seq., 29 U.S.C. §791 et seq., and 29 U.S.C.

CRS-22

Current Law/Selected Regulations

Title 5 United States Code and

Title 5 Code of Federal Regulations

Final DHS Regulations

Employment Opportunity (Subparts A-F, including Agency Program to

Promote Equal Employment Opportunity, Appeals and Civil Actions,

Remedies and Enforcement).

§206(d). Employees and applicants for employment in DHS will

continue to be covered by EEOC’s federal sector regulations found at

29 CFR Part 1614.

Authority derives from 5 U.S.C. §9701(a).

§9701.107. Program evaluation. DHS will establish procedures for

evaluating the regulations and their implementation. Designated

employee representatives will be provided with an opportunity to be

briefed and a specified timeframe to provide comments on the design

and results of program evaluations. Employee representatives will be

involved with the identification of the scope, objectives, and

methodology to be used in program evaluation and review of draft

findings and recommendations. Involvement in the evaluation process

does not waive the rights of any party under applicable law or

regulations.

Subpart B — Classification

General

DHS authority for Subpart B derives from 5 U.S.C. §9701(a)-(c).

§9701.201. Purpose. Subpart B contains regulations establishing a

CRS-23

Current Law/Selected Regulations

Title 5 United States Code and

Title 5 Code of Federal Regulations

Final DHS Regulations

5 U.S.C. Chapter 51 — Classification

5 U.S.C. §5101. Purpose. To provide a plan for classification of

positions whereby in determining the rate of basic pay which an

employee will receive, the principle of equal pay for substantially equal

work will be followed, and variations in rates of basic pay paid to

different employees will be in proportion to substantial differences in

the difficulty, responsibility, and qualification requirements of the work

performed and to the contributions of employees to efficiency and

economy in the service. Individual positions will, in accordance with

their duties, responsibilities, and qualification requirements, be so

grouped and identified by classes and grades, and the various classes

will be so described in published standards, that the resulting positionclassification system can be used in all phases of personnel

administration.

5 U.S.C. Chapter 53, Subchapter IV — Prevailing Rate Systems

5 U.S.C. §5341. Policy. It is the policy of Congress that rates of pay of

prevailing rate employees be fixed and adjusted from time to time as

nearly as is consistent with the public interest in accordance with

prevailing rates and be based on principles that there will be equal pay

for substantially equal work for all prevailing rate employees who are

working under similar conditions of employment in all agencies within

the same local wage area; there will be relative differences in pay within

classification structure and rules for covered DHS employees and

positions to replace the 5 U.S.C. Chapter 51 classification structure and

rules and the 5 U.S.C. Chapter 53, Subchapter IV job grading system, in

accordance with the merit principle of equal pay for work of equal

value. Any classification system must be established in conjunction

with the pay system described in Subpart C.

CRS-24

Current Law/Selected Regulations

Title 5 United States Code and

Title 5 Code of Federal Regulations

Final DHS Regulations

a local wage area when there are substantial or recognizable differences

in duties, responsibilities, and qualification requirements among

positions; the level of rates of pay will be maintained in line with

prevailing levels for comparable work within a local wage area; and the

level of rates of pay will be maintained so as to attract and retain

qualified prevailing rate employees.

Authority derives from 5 U.S.C. §9701(a).

§9701.202. Coverage. Subpart B applies to eligible DHS employees

and positions listed below, subject to a determination by the Secretary

or designee under §9701.102(b).

5 U.S.C. Chapter 53, Subchapter III — General Schedule Pay Rates

5 U.S.C. Chapter 53, Subchapter IV — Prevailing Rate Systems

5 U.S.C. §5376. Pay for certain senior-level positions

5 U.S.C. Chapter 53, Subchapter VIII — Pay for the Senior Executive

Service

Eligible for coverage are: employees and positions that would

otherwise be covered by the GS classification system; employees and

positions that would otherwise be covered by a prevailing rate system;

employees in senior-level (SL) and scientific or professional (ST)

positions who would otherwise be covered by 5 U.S.C. §5376; and SES

members who would otherwise be covered by 5 U.S.C. Chapter 53,

Subchapter VIII, subject to §9701.102(d).

5 U.S.C. Chapter 51 — Classification (includes classification and

grading of positions)

5 U.S.C. §5346. Job grading system

5 U.S.C. §5108. Classification of positions above GS-15

§9701.203. Waivers. When a specified category of employees is

covered by a classification system established under Subpart B, 5

U.S.C. Chapter 51 and 5 U.S.C. §5346, and related regulations, are

waived with respect to that category of employees, except as provided

CRS-25

Current Law/Selected Regulations

Title 5 United States Code and

Title 5 Code of Federal Regulations

Final DHS Regulations

immediately below, in §9701.106, and §9701.222(d) (with respect to

OPM’s authority under 5 U.S.C. §§5112(b) and 5346(c) to act on

requests for review of classification decisions). 5 U.S.C. §5108 is not

waived.

5 U.S.C. §5102. Definitions; application (unless otherwise noted)

“Grade” includes all classes of positions which, although different with

respect to kind or subject-matter of work, are sufficiently equivalent as

to level of difficulty and responsibility; and level of qualification

requirements of the work; to warrant their inclusion within one range of

rates of basic pay in the General Schedule.

§9701.204. Definitions.

“Band” means a work level or pay range within an occupational cluster.

“Basic pay” means the total amount of pay received during any one

calendar year at the rate fixed by law or administrative action for the

position ... including night and environmental differentials for

prevailing rate employees, but before any deductions and exclusive of

additional pay of any other kind. [5 CFR §530.202]

“Basic pay” means an employee’s rate of pay before any deductions and

exclusive of additional pay of any kind, except as expressly provided by

law or regulation. It includes locality and special rate supplements for

the specific purposes prescribed in §§9701.332(c) and 9701.333.

“Classification” means the analysis and identification of a position and

placing it in a class under the position-classification plan established by

OPM under 5 U.S.C. Chapter 51. [5 CFR §511.101(c)]

“Classification” also referred to as job evaluation, means the process of

analyzing and assigning a job or position to an occupational series,

cluster, and band for pay and other related purposes.

CRS-26

Current Law/Selected Regulations

Title 5 United States Code and

Title 5 Code of Federal Regulations

Final DHS Regulations

“Competencies’ means the measurable or observable knowledge, skills,

abilities, behaviors, and other characteristics required by a position.

“Class” or “class of positions” includes all positions which are

sufficiently similar, as to kind or subject-matter of work; level of

difficulty and responsibility; and the qualification requirements of the

work; to warrant similar treatment in personnel and pay administration.

“Occupational cluster” means a grouping of one or more associated or

related occupations or positions. An occupational cluster may include

one or more occupational series.

“Occupational series” means the number OPM or DHS assigns to a

group or family of similar positions for identification purposes.

“Position” means the work, consisting of the duties and responsibilities,

assigned by competent authority for performance by an employee. [5

CFR §511.101(e)]

“Position” or “Job” means the duties, responsibilities, and related

competency requirements that are assigned to an employee whom the

Secretary or designee approves for coverage under §9701.202(a).

Classification of positions is not subject to collective bargaining.

§9701.205. Bar on collective bargaining. As provided in the

definition of “conditions of employment” in §9701.504, any

classification system established under Subpart B is not subject to

collective bargaining. This bar on collective bargaining applies to all

aspects of the classification system, including but not limited to

coverage determinations, the design of the classification structure, and

classification methods, criteria, and administrative procedures and

arrangements.

CRS-27

Current Law/Selected Regulations

Title 5 United States Code and

Title 5 Code of Federal Regulations

Final DHS Regulations

Classification Structure

5 U.S.C. §5106. Basis for classifying positions

Each position is placed in its appropriate class on the basis of the duties

and responsibilities of the position and the qualifications required by

those duties and responsibilities. Each class is placed in its appropriate

grade on the basis of the level of difficulty, responsibility, and

qualification requirements of the work of the class.

§9701.211. Occupational clusters. For purposes of classifying

positions, DHS may, after coordination with OPM, establish

occupational clusters based on factors such as mission or function;

nature of work; qualifications or competencies; career or pay

progression patterns; relevant labor-market features; and other

characteristics of those occupations or positions. DHS must document

in implementing directives the criteria and rationale for grouping

occupations or positions into occupational clusters.

5 U.S.C. §5104. Basis for grading positions

Provides for 15 General Schedule pay grades. The statute defines each

of the pay grades in terms of their difficulty and responsibility.

§9701.212. Bands. For purposes of identifying relative levels of work

and corresponding pay ranges, DHS may, after coordination with OPM,

establish one or more bands within each occupational cluster. Each

occupational cluster may include, but is not limited to, the following

bands: Entry/Developmental — work that involves gaining the

competencies needed to perform successfully in a Full Performance

band through appropriate formal training and/or on-the-job experience.

Full Performance — work that involves the successful completion of

any required entry-level training and/or developmental activities

necessary to independently perform the full range of non-supervisory

duties of a position in an occupational cluster.

Senior Expert — work that involves an extraordinary level of

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specialized knowledge or expertise upon which DHS relies for the

accomplishment of critical mission goals and objectives; reserved for a

limited number of non-supervisory employees.

Supervisory — work that may involve hiring or selecting employees,

assigning work, managing performance, recognizing and rewarding

employees, and other associated duties.

5 U.S.C. §5106. Basis for classifying positions

Each position is placed in its appropriate class on the basis of the duties

and responsibilities of the position and the qualifications required by

those duties and responsibilities. Each class is placed in its appropriate

grade on the basis of the level of difficulty, responsibility, and

qualification requirements of the work of the class.

DHS must document in implementing directives the definitions for each

band which specify the type and range of difficulty and responsibility,

qualifications, competencies, or other characteristics of the work

encompassed by the band.

5 U.S.C. §5105. Standards for classification of positions

OPM , after consulting the agencies, prepares standards for placing

positions in their proper classes and grades. OPM may make such

inquiries or investigations of the duties, responsibilities, and

qualification requirements of positions as it considers necessary for this

purpose. In the standards, OPM defines the various classes of positions

in terms of duties, responsibilities, and qualification requirements;

establishes the official class titles; and sets forth the grades in which the

classes have been placed by OPM. OPM must revise, supplement, or

DHS must, after coordination with OPM, establish qualification

standards and requirements for each occupational cluster, occupational

series, and/or band. DHS may use the qualification standards

established by OPM or, after coordination with OPM, may establish

different qualification standards. Any DHS authority to establish

qualification standards or requirements under 5 U.S.C. Chapters 31 and

33 and OPM implementing regulations is not waived or modified.

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abolish existing standards, or prepare new standards so that positions

will be covered by current published standards. The official class titles

are used for personnel, budget, and fiscal purposes.

5 U.S.C. §5107. Classification of positions

Except as otherwise provided in Chapter 51, each agency places each

position under its jurisdiction in its appropriate class and grade in

conformance with OPM standards. When facts warrant, an agency may

change a position from one class or grade to another.

Classification Process

5 U.S.C. §5104. Basis for grading positions

Provides for 15 General Schedule pay grades. The statute defines each

of the pay grades in terms of their difficulty and responsibility.

5 U.S.C. §5108. Classification of positions above GS-15

Authorizes OPM to establish, and from time to time revise, the

maximum number of positions classified at any one time above GS-15,

and establish standards and procedures for classifying positions above

GS-15 for any executive agency.

5 U.S.C. 5113. Classification records

OPM may prescribe the form in which each agency must record the

duties and responsibilities of positions and the places where these

records must be maintained; examine these or other pertinent records of

the agency; and interview agency employees who have knowledge of

the duties and responsibilities of positions and information as to the

reasons for placing a position in a class or grade.

§9701.221. Classification requirements. DHS must develop a

methodology for describing and documenting the duties, qualifications,

and other requirements of categories of jobs, and DHS must make such

descriptions and documentation available to affected employees.

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5 U.S.C. §5106. Basis for classifying positions

Each position is placed in its appropriate class on the basis of the duties

and responsibilities of the position and the qualifications required by

those duties and responsibilities. Each class is placed in its appropriate

grade on the basis of the level of difficulty, responsibility, and

qualification requirements of the work of the class.

An authorized agency official must assign occupational series to jobs

consistent with definitions established by OPM or by DHS, after

coordination with OPM; and apply the criteria and definitions required

by §9701.211 and §9701.212 to assign jobs to an appropriate

occupational cluster and band.