# Personnel Demonstration Project at the Army Futures Command Science and Technology Reinvention Laboratory (STRL)

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URL: https://www.frixlaw.com/law-library/documents/fr%3A2024-03586

## Record

- **Collection:** Federal Register
- **Document type:** Notice
- **Published:** February 22, 2024
- **Citation:** 89 FR 13548

## Text

DEPARTMENT OF DEFENSE
Office of the Secretary
[Docket ID: DoD-2022-OS-0117]
Personnel Demonstration Project at the Army Futures Command Science and Technology Reinvention Laboratory (STRL)

AGENCY:

Under Secretary of Defense for Research and Engineering (USD(R&E)), Department of Defense (DoD).

ACTION:

Personnel demonstration project notice.

SUMMARY:

This
Federal Register
Notice (FRN) serves as notice of the adoption of STRL personnel demonstration project flexibilities by an STRL comprised of certain organizations within the U.S. Army Futures Command (AFC), known collectively as the AFC STRL. The organizations comprising the AFC STRL are the U.S. Army Futures Command Headquarters and Headquarters Components (AFC HHC); the Futures and Concepts Center (FCC); Cross Functional Teams (CFTs); The Research and Analysis Center (TRAC); the Combat Capabilities Development Command (CCDC) Headquarters (also known as DEVCOM Headquarters); and the DEVCOM Analysis Center (DAC). The AFC STRL will adopt with some modifications, personnel demonstration project flexibilities implemented by the Combat Capabilities Development Command (CCDC) Army Research Laboratory (ARL); CCDC Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance, and Reconnaissance Center (C5ISR); the Army Research Institute for the Behavioral and Social Sciences (ARI); the CCDC Armament Center (AC); the Technical Center (TC), U.S. Army Space and Missile Defense Command (USASMDC); and the Joint Warfare Analysis Center (JWAC). Most flexibilities and administrative procedures are adopted without changes. However, modifications were made when necessary to address specific management and workforce needs. In addition, changes were made based on current law, best practices, and administrative guidance.

DATES:

Implementation of this demonstration project will begin in no earlier than February 22, 2024.

FOR FURTHER INFORMATION CONTACT:

•
AFC STRL:
Marlowe Richmond, (571) 588-1219,
marlowe.richmond.civ@army.mil.

•
Office of Under Secretary of Defense (Research and Engineering), Defense Research Enterprise Office:
Dr. James B. Petro, (571) 286-6265,
James.B.Petro.civ@mail.mil.

SUPPLEMENTARY INFORMATION:

As authorized by section 4121 of title 10, United States Code (U.S.C.), the Secretary of Defense may carry out personnel demonstration projects at DoD laboratories designated as DoD STRLs. On May 13, 2021, certain elements of AFC were designated as a single STRL, known as the AFC STRL. The AFC STRL will administer a single personnel demonstration project, hereinafter referred to as the “Modernization Personnel Demonstration Project” or “Mod Demo,” for these AFC organizations: the AFC Headquarters and Headquarters Components, the Futures and Concepts Center, Cross-Functional Teams (CFTs), the Research and Analysis Center, and the U.S. Army Combat Capabilities Development Command (DEVCOM) Headquarters offices. In addition, the DEVCOM Data and Analysis Center (DAC), which is partially aligned with the Army Research Laboratory STRL, will be realigned, in its entirety, as part of the AFC STRL. The remaining organizations within AFC will continue to operate as independent STRLs under their own personnel demonstration project authorities.

Through the USD(R&E), the Secretary exercises the authorities of the Director, Office of Personnel Management (OPM), under 5 U.S.C. 4703 to conduct personnel demonstration projects at DoD laboratories designated as STRLs. All STRLs authorized pursuant to 10 U.S.C. 4121 may use the provisions described in this FRN, when implementing these flexibilities as part of an approved personnel demonstration project plan published in an FRN and after fulfilling any collective bargaining obligations. Each STRL will establish internal operating procedures (IOPs) as appropriate.

1. Background

Many studies have been conducted since 1966 on the workforce quality of the laboratories and associated personnel. Most of the studies recommended improvements in civilian personnel policy, organization, and management. Pursuant to the authority provided in 10 U.S.C. 4121, several DoD STRL personnel demonstration projects have been implemented. The demonstration projects are “generally similar in nature” to the Department of Navy's China Lake Personnel Demonstration Project. The terminology, “generally similar in nature,” does not imply an emulation of various features, but, rather, it implies a similar opportunity and authority to develop personnel flexibilities that significantly increase the decision authority of laboratory commanders and/or directors.

With the assistance of other DoD STRLs, including the independent STRLs within AFC, and experts from across DoD, the AFC STRL operational planning team conducted a thorough review of STRL personnel practices, laws, regulations, and guidance to identify potential flexibilities that would allow the AFC STRL to create a contemporary, flexible personnel management system to attract, motivate, train, and retain a top-performing science, technology, and modernization workforce. In addition to existing flexibilities available to all DoD STRL, new flexibilities and modifications are being proposed for MoD Demo following study and analysis by the AFC STRL operational planning team.

Although the organizations comprising the AFC STRL are components of the umbrella AFC organization that is responsible for modernizing the Army, the varied composition of the AFC STRL modernization workforce, including headquarters personnel, analysts, integrators, technology and concept creators, and traditional Science & Technology (S&T) innovators, requires significant personnel management flexibility. As a result, the proposed AFC STRL Mod Demo plan incorporates multiple IOPs, decentralized lines of authority, and new flexibilities adapted from other STRL demonstration projects.

The AFC STRL Mod Demo plan includes:

(1) Changes to appointment authorities, hiring rules, and qualification standards;

(2) Changes to pay setting rules and regulations;

(3) Pay banding and simplified job classification;

(4) Science, Technology, Engineering, and Mathematics (STEM) Student Employment Program (SSEP) and Accelerated Intern Compensation;

(5) Sabbaticals;

(6) Substitution for the Defense Performance Management and Appraisal Program (DPMAP);

(7) Academic degree, certificate, and critical skills training;

(8) Senior Scientific Technical Manager (SSTM) positions;

(9) Changes to workforce shaping rules, such as Reduction-in-Force (RIF), Voluntary Early Retirement Authority (VERA), and Voluntary Separation Incentive Program (VSIP);

(10) Voluntary Emeritus and Expert Program;

(11) Improved incentives; and

(12) Extended Probationary Periods.

Many aspects of a demonstration project are experimental. Modifications may be made from time to time as experience is gained, results analyzed, and conclusions reached on how the system is working, in accordance with the provisions of Department of Defense Instruction (DoDI) 3201.05, “Management of Science and Technology Reinvention Laboratory Personnel Demonstration Projects” (available at
https://www.esd.whs.mil/Portals/54/Documents/DD/issuances/dodi/320105p.PDF?ver=e_ePssSOULpXxcH2PcRhwA%3d%3d
).

2. Overview

The AFC STRL will adopt flexibilities implemented by the following STRL Personnel Demonstration Project plans: CCDC AC, 76 FR 3744, January 20, 2011; ARI, 85 FR 76038, November 27, 2020; CCDC ARL, 63 FR 10680, March 4, 1998; CCDC C5ISR, 66 FR 54872, October 30, 2001; JWAC, 85 FR 29414, May 15, 2020; and USASMDC-TC, 85 FR 3339, January 21, 2020.

Adoption of STRL personnel demonstration project flexibilities will enable the AFC STRL to achieve the best workforce for its modernization mission, adjust the workforce for change, improve workforce quality, and allow the AFC STRL to acquire and retain an enthusiastic, innovative, and highly educated and trained workforce for Army modernization. The purpose of the project is to demonstrate that the effectiveness of DoD organizations can be enhanced by allowing greater managerial control over personnel functions and, at the same time, expand the opportunities available to employees through a more responsive and flexible personnel system. Additionally, because AFC STRL component organizations are geographically dispersed to highly competitive recruitment areas, implementation of the AFC STRL Mod Demo is essential to competitively hire and retain a highly qualified workforce.

3. Access to Flexibilities of Other STRLs

Flexibilities published in this FRN will be available for use by DoD laboratories designated as STRLs pursuant to 10 U.S.C. 4121, including any newly designated STRLs, if they wish to adopt them in accordance with DoDI 3201.05, and after the fulfillment of any collective bargaining obligations.

4. Summary of Comments

Sixty-four (64) commenters provided comments and questions regarding the AFC STRL Personnel Demonstration Project,
Federal Register
, 87 FR 62801, dated October 17, 2022. The following is a summary of these written questions by topical area and a response to each.

A. Background

Comment:
Some commenters asked for a copy of the AFC STRL Mod Demo plan and asked if the plan would be disseminated to the workforce for comment, specifically related to the workforce shaping rules.

Response:
Changes to section II.F. of the Notice were made to clarify that, before implementation of the AFC STRL Mod Demo, the IOPs will be distributed to the workforce for information only. Details of the workforce reshaping rules will be included in the IOPs.

Comment:
Several commenters suggested that the rationale for Mod Demo, to enhance managerial flexibilities to “attract, motivate, train, and retain a top-performing science, technology, and modernization workforce,” is boilerplate and not applicable to the AFC STRL.

Response:
No changes to the Notice were made based on these comments. The introductory material explains why a one-size-fits-all government-wide system is no longer relevant for AFC and describes several new flexibilities designed to streamline and improve overall personnel management in AFC and facilitate efforts to compete with the private sector. AFC conducted a thorough review of the personnel practices adopted by STRLs and available flexibilities to identify those that would address AFC management and workforce needs. The resulting Mod Demo includes personnel flexibilities that optimize the ability to hire, retain, train, and engage a high-performing workforce while retaining many of the existing practices that make working for the Federal Government desirable. The proposed flexibilities, or innovative personnel practices, can be found in section III.

B. Purpose

Comment:
A commenter recommended changing “projects” to “project” in the first sentence.

Response:
This change has been made.

C. Problems With the Present System

Comment:
Several commenters questioned DoD's conclusion that the current “GS system's approach to career flexibility, progression, and changing work assignments is rigid, slow and designed for industrial-era employees who entered Civil Service and remained until retirement.” The commenters stated that the current DPMAP system works well and that any problems were due to leaders failing to properly lead their employees. Furthermore, commenters asked what was meant by innovative personnel practices and what the proposed flexibilities were.

Response:
No changes to the Notice were made based on these comments. For STRLs such as AFC, which is tasked with ensuring the Army and its Soldiers remain at the forefront of technological innovation and warfighting ability, the General Schedule (GS) personnel system and DPMAP do not provide quick or easy ways of responding to changing work requirements. Unlike the GS system, which has 15 grades with 10 levels each and involves individual position descriptions which must be classified by complex Title 5 classification standards, the AFC STRL Mod Demo will implement a pay banding system and a pay for performance system designed to provide an effective, efficient, and flexible method for assessing, compensating, and managing a transformation-focused workforce. Employees will continue to have an opportunity to receive a base pay increase based on their level of performance during the appraisal year. Importantly, changes to the classification and pay system will enable management to create new types of jobs that respond to the fast-changing world of modernization work in which AFC STRL is engaged. The speed with which new science, technology, and engineering concepts emerge demands the ability to quickly re-shape work assignments, re-skill and up-skill employees, and maximize the potential of the existing workforce. Unlike the rigid rules of the GS system which limit internal reassignments, promotions, and training, the AFC STRL Mod Demo provides flexibility to train and assign personnel as needed to respond to the rapid changes in the modernization mission. In addition, AFC STRL Mod Demo enables and enhances innovative ways to attract, recruit, and retain current and future employees through better pay and hiring flexibilities. In addition, AFC STRL Mod Demo will provide supervisor and leadership training to develop capabilities and skills to better engage employees.

D. Changes Required/Expected Benefits

Comment:
Commenters questioned whether STRL personnel demonstration projects increase employee satisfaction and asked for surveys or other data to support this conclusion. Some commenters indicated that current and former alternate personnel systems adopted by DoD, such as the National

Security Personnel System (NSPS) and the Acquisition Demonstration, were not preferable to the General Schedule (GS) system. One commenter asked whether AFC and the Army studied other agencies that are succeeding and if any best practices were used to improve organizational effectiveness and employee satisfaction.

Response:
No changes to the Notice were made based on these comments. Although surveys were not conducted with the AFC workforce to determine if the employees wanted a pay banded system or to determine if these changes would produce increased workforce satisfaction or engagement, a recent survey of the STRL demonstration project workforce showed 86% of respondents were either neutral, satisfied or very satisfied with their jobs and 89% were satisfied with management. (Science and Technology Reinvention Laboratory (STRL) Demonstration Project Summary of Evaluation Results for Fiscal Year Ending in 2019, Office of the Under Secretary of Defense—Research & Engineering (USD(R&E)) Office of Labs and Personnel (L&PO), October 2021). Early OPM evaluation reports indicate that acceptance of demonstration projects increases as time goes on, with some STRLs seeing acceptance increasing 40-50% in approximately eight years. Trust and confidence in supervisors also increased under several demonstration projects, as well as job satisfaction. (A Status Report on Personnel Demonstration Projects in the Federal Government, U.S. Office of Personnel Management, December 2006). Due to the mission of Army Futures Command, it is imperative to transform recruitment, hiring, and retention programs. The NSPS was a centrally operated personnel system that did not permit the flexibilities, direct hiring authorities, and focus on a highly technical workforce that are the signature elements of the STRL demonstration projects. NSPS was particularly criticized for its inflexibility and inability to change with lessons learned, whereas STRL demonstration projects provide flexibility and local authority to apply lessons learned to improve functionality. STRL demonstration projects are adaptable and responsive to workforce feedback. AFC STRL Mod Demo pay pools will be locally managed to facilitate equity within similar workforce elements. Importantly, AFC STRL Mod Demo will be evaluated within five years of implementation in accordance with 5 U.S.C. chapter 47. Data will be collected internally and externally based on standards and guidelines developed by the USD(R&E). Furthermore, AFC STRL Mod Demo will collect climate survey data throughout the life of the project. Results of evaluation data will be provided to the USD(R&E) and the AFC STRL Mod Demo workforce, as appropriate. Each year the AFC STRL Personnel Management Board (PMB) will review the STRL policies to determine if changes are needed. Unions or a neutral third party will be informed based on bargaining unit obligations. AFC is looking to become a workplace of choice and to adopt best practices by agencies such as the National Aeronautics and Space Agency, which is consistently recognized as one of the best places to work in the Federal government by the Partnership for Public Service.

Comment:
Commenters expressed concern that the goals of the program do not have a baseline and that it is unclear how AFC STRL Mod Demo will demonstrate that a human resource system tailored to the mission and needs of the modernization workforce will facilitate more effective, efficient, and adaptable organizational systems. Commenters suggested that the stated STRL goal of increased permeability between the civil service and private industry will cause employees to lose privileges and rights in comparison to other Federal employees.

Response:
No changes to the Notice were made based on these comments. AFC STRL Mod Demo will be evaluated based on standards and guidelines developed by the USD(R&E) and AFC STRL Mod Demo, including any applicable baseline data requirements. As stated in this Notice, “All personnel laws, regulations, and guidelines not waived by this plan will remain in effect. Basic employee rights will be safeguarded, and Merit System Principles will be maintained.” Increasing permeability between the civil service and private industry is expected to have positive effects on employees rather than causing them to lose privileges. STRL flexibilities provide opportunities that attract and retain critical talent. The AFC STRL Mod Demo is designed to reflect different organizational mission requirements along with career progression for Science & Engineering (S&E) and Business and Technical (B&T) career paths and has been successfully implemented in other STRL demonstration projects.

E. Participating Organizations

Comment:
Some commenters identified that the names of the Software Factory (SWF) and Network (NW CFT) should be changed to their current designations. Additionally, commenters recommended to delete “a” from the first sentence of the second paragraph.

Response:
These changes have been made. The correct names and acronyms are Army Software Factory (ASWF) and Network Command Control Communications Integration (NC3I).

F. Personnel Management Board (PMB)

Comment:
A commenter asked if the demographics of the PMB would be known to the workforce. The commenter was concerned about diversity on the PMB and recommended the inclusion of GS-13 and GS-14 representatives from the career fields represented within AFC STRL Mod Demo.

Response:
No changes to the Notice were made based on these comments. PMB members will be appointed in accordance with this FRN and IOPs will include measures for ensuring a variety of perspectives are represented. The names of PMB members will be provided to the workforce.

Comment:
Commenters recommended administrative changes to clarify position titles and references.

Response:
The changes have been made.

G. Organizational Structure and Design

Comment:
Commenters expressed various concerns about whether funding was available to implement AFC Mod Demo. More specifically, commenters inquired whether: (1) Employees will receive bonuses in fiscal year (FY) 23; (2) funds from the current FY23 bonus pool will be used to convert the workforce; (3) the STRL was included in the Program Objective Memorandum (POM); (4) unforecasted requirements take priority; (5) inflation impacted the budget; (6) civilian pay and benefits increases are impacted; (7) Army operating budgets and the number of civilian positions may be cut; (8) has funding to pay for step increase buy-ins, software costs, awards, hiring incentives; (9) the funding source has been identified for DA centrally funded interns; and (10) AFC STRL Mod Demo is revenue neutral. Lastly, commenters asked how AFC STRL Mod Demo makes sense based on the type of funding available to pay civilian employees.

Response:
No changes to the Notice were made based on these comments. Implementation of AFC Mod Demo will not change the types of funding available for civilian pay, including locality pay, or the average rates used by the Army Budget Office to allocate this funding based on the number of civilian

positions. Annual performance awards and other monetary incentives for civilian employees will continue to be separately planned and executed as part of AFC's command budgeting process.

H. Pay Banding

Comment:
Some commenters expressed concerns with the AFC STRL Mod Demo organizations use of control points. They inquired whether they will be published to the workforce prior to implementation. They also inquired whether they were needed, with one commenter suggesting that they will reduce the flexibility of the AFC STRL Mod Demo and cause it to resemble the General Schedule system.

Response:
Section III.B.3 was changed to address these comments. Although the AFC Mod Demo will use a pay banding structure, not all positions have duties and responsibilities that warrant unconstrained salary progression through the entire range of the pay band. Control points within a pay band are a tool for managing organization workforce structure and pay to reward performance while ensuring employees are appropriately compensated. The following language has been added to section III.B.3: “Control points may be used as a compensation strategy when management determines the duties and responsibilities of a position do not warrant unconstrained salary progression through the entire range of the pay band.”

Comment:
A commenter stated that the 2210 occupational series under S&E was unclear and recommended clarifying language.

Response:
The following language has been added to section III.B.1: “This career path includes certain Information Technology (IT) (occupational series 2210) positions. It includes such positions that contribute to highly technical and/or scientific programs that reside in the research, development, or engineering domains, using offensive, and defensive cyber competencies, and directly support science and technology initiatives contributing to the development of cyber resilient Army transformation and readiness technologies. All other IT specialist positions will be included in the B&T career path.”

I. Classification

Comment:
A commenter asked if the organizations that fall under the AFC STRL Mod Demo will have classification authority or if the authority will be at the AFC HQ level.

Response:
No changes to the Notice were made based on these comments. AFC STRL Mod Demo organizations will have classification authority.

Comment:
Commenters asked if, upon conversion or later in time, an employee's career path or occupational series may be changed even if the employee's qualification is appropriate to the employee's current job description and qualification requirement.

Response:
No changes to the Notice were made based on these comments. Career Path (or pay plan) refers to Science & Engineering (DB), Business & Technical (DE), and Support (DK) instead of General Schedule (GS). As indicated in section IV.A, upon conversion, employees will be placed in a career path (
i.e.,
DB, DE, DK) based upon their occupational series, with no change to occupational series. Following conversion, employees who are qualified for vacant positions in another occupational series or career path may compete for the vacancy.

J. Pay-for-Performance Management System (PFP)

Comment:
A commenter asked if the rating period would change under AFC STRL Mod Demo.

Response:
No changes to the Notice were made based on these comments. The rating period will be determined by each AFC STRL Mod Demo organization, and it will be published in the IOPs.

Comment:
Some commenters expressed concerns that the AFC STRL Mod Demo is using a minimum of four elements for performance instead of three elements like other demonstration projects and asked if benchmark standards will be developed and published. Commenters also requested AFC provide detailed hands-on training concerning PFP and specifically on the performance elements.

Response:
No changes to the Notice were made based on these comments. The performance element provisions in this Notice were developed following examination of existing STRL Lab Demo Performance Management Systems. Eight performance elements, with a required four minimum elements, will enable organizations within the AFC STRL Mod Demo to select the appropriate performance criteria to meet their own individual, organizational needs, and mission requirements. Performance elements may evolve over time to ensure individual and organizational success. The PMB will review the performance elements annually and make any necessary changes prior to the start of a new rating period. Additionally, the performance management system's use of benchmark performance criteria establishes a common set of standards for evaluating performance and assigning ratings. The benchmark performance criteria will be published annually and whenever changes are made. Finally, the use of a pay pool panel and reconciliation process provides additional checks and balances to the evaluation process. Detailed training on all STRL programs and flexibilities will be provided to the workforce prior to conversion. Supervisors will also receive training on the performance management system and rating processes to support an accurate evaluation of performance.

Comment:
One commenter recommended that the sentence, “AFC STRL organizations will provide written notice to the workforce at the start of the rating cycle concerning the basis of the share assignment,” be moved from III.D.8 Option A to the first paragraph in section III.D.8 and before Figure 3, because it applies to both Option A and B.

Response:
This change has been made.

Comment:
Commenters asked how factors will be used to determine if the employee will get a lower amount of money than what was received the previous year.

Response:
No changes to the Notice were made based on these comments. Specific guidance addressing pay pool requirements and factors used to determine shares will be published annually and included in organization's respective IOPs.

Comment:
A commenter recommended adding additional leadership wording to the Supervisor/Equal Employment Opportunity (EEO) performance element.

Response:
Section III.D.2.8 was revised to add “; and (7) Influences, motivates, and challenges others through adaptive leadership; takes charge of assigned effort(s); overcomes challenges to success; resolves personal and professional conflicts; and looks for opportunities to assist others to achieve success.”

Comment:
A commenter recommended that the Awards section include added wording indicating employees cannot be compensated for the same contribution twice (
e.g.,
performance and incentive).

Response:
No changes to the Notice were made based on these comments. This level of detail is more appropriate for AFC STRL Mod Demo organization IOPs.

Comment:
Commenters asked why AFC STRL Mod Demo is concerned about information exchange with

industry and why that effects Government employee ratings.

Response:
No changes to the Notice were made based on these comments. The AFC Mod Demo organizations comprise an STRL, which is a research and development (R&D) laboratory as defined in DoDI 3201.05. It is staffed with a scientific and engineering workforce principally involved in performing exploratory development or research work and conducts a substantial portion of R&D activities in-house using government personnel. It provides Army transformation solutions (integrated concepts, organizational designs, and technologies) in order to allow the Joint Force, employing Army capabilities, to achieve overmatch in the future operation environment. The STRL mission requires information exchange through collaboration with industry and academic partners to support the delivery of modernization solutions so the Army can make sure Soldiers have what they need, before they need it, to protect tomorrow. As a transformation and modernization organization, research and collaboration with industry and academic partners directly impacts an employee's ability to meet performance objectives and goals. This influences an employee's performance rating and the ability of the command to meet mission requirements.

Comment:
Commenters stated that implementation of Mod Demo should be delayed pending completion of a Congressionally required study and further consideration by the Department and Congress.

Response:
No changes to the Notice were made based on these comments. The Defense Business Board talent management study was completed and its recommendations provided to the Department for consideration.

Comment:
Commenters asked about eligibility for raises based on tenure instead of performance, expressed concerns that the inability to receive step increases based on longevity would place employees at a disadvantage when compared to other employees in similar job series within the Federal Government and affect retirement calculations based on highest income earned, and suggested current GS employees be grandfathered for pay increases based on tenure. Commenters also questioned how employees would benefit without additional funds to incentivize performance and requested measurable baselines for the goals of the project and mechanisms for assessing contribution to ensure funds are divided equitably.

Response:
No changes to the Notice were made based on these comments. AFC Mod Demo implements a PFP system that provides an effective, efficient, and flexible method for assessing, compensating, and managing the workforce. Employees will continue to receive the general pay increase in most circumstances. Moreover, employees have the opportunity to receive a base pay increase, a bonus, or a combination based on their level of performance during the appraisal year. Funds that were previously used for GS step increases, quality step increases, and promotions will be used to fund the performance increases. The goals of the AFC STRL Mod Demo are based on years of demonstration project experiences in other organizations as reported in, “A Status Report on Personnel Demonstration Projects in the Federal Government”, U.S. Office of Personnel Management, December 2006, and “Alternative Personnel Systems in Practice and a Guide to the Future,” U.S. Office of Personnel Management, October 2005. The evaluation model, as described in this Notice, will identify elements critical to an evaluation of the effectiveness of the AFC STRL Mod Demo flexibilities.

Comment:
Some commenters asked about the size of pay pools given that some organizations may have only 20 employees while others have hundreds. They expressed concern about the range of grades and salaries in the pay pools. Additionally, a commenter questioned having different pay pools for supervisors and non-supervisors. Lastly, commenters asked if all of AFC STRL Mod Demo organizations will be sharing pay pools and funding.

Response:
No changes have been made to the Notice in response to these comments. Pay pools will be established in accordance with the IOP of each AFC STRL Mod Demo organization and the size may vary depending on the organization. AFC STRL Mod Demo organizations will thoroughly evaluate options and may use modeling, mock payout exercises, and other means of analysis to achieve optimal pay pool composition.

Comment:
Some commenters asked about pay pool targets/caps that will limit how organizations can increase employee pay and asked if it will be similar to current awards. Additionally, commenters asked how conversion will work with Information Technology 2210 bonuses and if an employee is at the top of a pay band and currently receiving a 2210 bonus if it will place the employee in the next pay band.

Response:
No changes to the Notice were made based on these comments. As stated in section III.D.7, annual pay pool limits for base pay increases and bonuses, also referred to as payout factors, will be established by the AFC STRL Mod Demo organizations. The funds used for base pay increases are those that would have been available from GS within-grade increases, quality step increases, and promotions. This amount will be defined based on historical data and set at no less than two percent of total adjusted base pay and no more than the maximum set by the AFC STRL Mod Demo organization. Award amount will be defined based on historical data and set at no less than one percent of total adjusted base pay and no more than the maximum set by the AFC STRL Mod Demo Commanding General (CG). AFC STRL organizations may continue to make full use of recruitment, retention, and relocation payments as currently provided for by OPM. This includes OPM hiring and pay flexibilities such as monetary incentives for targeted occupational specialties. Conversion guidance for all series will be in accordance with section IV of this FRN.

Comment:
Commenters expressed concerns about supervisor responsibilities to notify employees of unsatisfactory performance and opportunities for such employees to improve performance.

Response:
No changes to the Notice were made based on these comments. Employees and supervisors are expected to actively participate in discussions regarding expectations and potential obstacles to meeting employee performance goals. As stated in section III.D.5, “Whenever a supervisor recognizes an employee's performance on one or more performance elements is unacceptable, the supervisor should immediately inform the employee. Efforts will be made to identify the possible reasons for the unacceptable performance.” Further, if an employee continues to perform at an unacceptable level or has received a Level 1 Rating of Record, the employee will be placed on a formal performance improvement plan (PIP). The supervisor will identify the actions that need to be corrected or improved, outline required time frames (no less than 30 days) to demonstrate such improvement and provide the employee with any available assistance as appropriate. Progress will be monitored during the PIP, and all counseling sessions will be documented.

Comment:
A commenter asked what the equivalency was between the current rating system in MyBiz (
e.g.,
1, 3, 5) and the new system.

Response:
No changes to the Notice were made based on these comments. As stated in section III.D.8, AFC STRL Mod Demo will follow pattern H, as described in 5 CFR 430.208(d), which provides for 5 summary levels. An employee who receives a level 3 rating is considered to have performed successfully during the rating period.

Comment:
A commenter asked whether an employee who gets a satisfactory level of evaluation may be placed in a lower pay band within the same career path or placed into a pay band in a different career path with a lower maximum base pay.

Response:
No changes to the Notice were made based on these comments. Employees with a satisfactory rating may be voluntarily placed in a lower pay band or another career path with lower pay if they volunteer or request the change. Employees may be involuntarily placed in a lower pay band or another career path with lower pay for cause (
i.e.,
performance or conduct) or for reasons other than cause (
e.g.,
erosion of duties, reclassification of duties to a lower pay band, placement actions resulting from RIF procedures). Involuntary actions will be executed using the applicable adverse action procedures in 5 U.S.C. chapter 43 or chapter 75.

Comment:
Commenters criticized the pay banding system, suggesting it is designed by lawyers and human resource-oriented persons who focus too much on “measurement” rather than “motivation” and “leadership.” Additionally, commenters suggested that collaborative coaching styles of leadership are better at motivating people than formalized “measurement” systems which can serve as a demotivating factor.

Response:
No changes to the Notice were made based on these comments. The purpose of the project is to demonstrate that the effectiveness of DoD organizations can be enhanced by allowing greater managerial control over personnel functions and, at the same time, expand the opportunities available to employees through a more responsive and flexible personnel system. Additionally, the pay-for-performance system provides an effective, efficient, and flexible method for assessing, compensating, and managing the AFC STRL Mod Demo workforce. It is essential for the development of a high performing workforce and to provide management at the lowest practical level, the authority, control, and flexibility to achieve a quality and collaborative relationship with employees to ensure the organization's mission requirements are met. Pay-for-performance allows for more employee involvement in the assessment process, strives to increase communication between supervisor and employee, promotes a clear accountability of performance, facilitates employee career progression, and provides an understandable and rational basis for salary changes by linking pay and performance.

Comment:
Commenters were concerned with the awards percentage in this document being below the percentage that has been mandated by OPM in the past two years and asked if OPM will accept a lower percentage for AFC STRL Mod Demo. Additionally, commenters asked whether the lower percentage is an effort to divert money to cover the base pay amounts. Furthermore, commenters asked about the source of funding for Extraordinary Achievement Rewards and whether they were part of the POM used to plan future funding. Lastly, commenters asked how budget management will work in AFC STRL Mod Demo.

Response:
No changes to the Notice were made based on these comments. AFC STRL Mod Demo allows the STRL Director to establish limits on awards administered by the pay pool as part of the civilian pay budget. Extraordinary Achievement and other approved incentives will be administered separately as part of the command's overall annual budget.

K. Hiring and Appointment Authorities

Comment:
Commenters questioned how an extended probationary period retains quality personnel and suggested it goes against progressive management practices for leading, motivating, recruiting, and retaining a quality workforce.

Response:
No changes to the Notice were made based on these comments. Authority to adopt an extended probationary period is a flexibility that enables supervisors to have adequate time to fully evaluate an employee's ability to complete cycles of work and to fully assess an employee's contribution and conduct.

L. Internal Placement

Comment:
Commenters recommended both competitive and non-competitive details; the option to extend temporary promotions be limited to one additional year; and the word “affected” be changed to “effected” in the fifth sentence.

Response:
The third sentence in section III.G.5, Details and Expanded Temporary Promotions, was revised to address these comments.

Comment:
Commenters asked how a promotion opportunity will be identified and what conditions and criteria are applicable when an employee is transferred to a lower pay band.

Response:
No changes to the Notice were made based on these comments. Policies related to promotions and transfers to lower pay bands are documented in Section III.G.1 of this Notice. Additional processes and procedures will be documented in the IOP.

M. Pay Setting

Comment:
A commenter stated that proposed Section III.H.7.a., under Supervisory and Team Leader Pay Adjustments, is confusing.

Response:
Section III.H.7. was revised to remove proposed paragraph a. and relabel paragraphs b. and c. to a. and b.

Comment:
Commenters stated that the last sentence in Section III.H.7.b., Supervisory and Team Leader Pay Adjustments, that describes how pay will be set for supervisory/team leader positions upon conversion into the project should be removed because employees will get a within grade increase (WGI) buy-in, as long as the employee is not at a step 10, or receiving a retained rate, on the day of implementation. Additionally, commenters asked what the word “adjustment” meant when referring to WGI equity.

Response:
Section III.H.7.b, Supervisory and Team Leader Pay Adjustment, has been revised to remove, “After conversion into the demonstration project, a career employee selected for a supervisory/team leader position may be considered for a pay adjustment into the same or substantially similar position, supervisors/team leaders will be converted at their existing base rate of pay and will not be eligible for a base pay adjustment.” The word, “adjustment,” refers to increases in base pay upon conversion into Mod Demo, as described in Section IV.A.

Comment:
Commenters asked about supplemental pay rates and whether an AFC STRL Mod Demo organization can decrease an employee's compensation.

Response:
No changes to the Notice were made based on these comments. The supplemental pay flexibility permits AFC STRL Mod Demo to independently establish supplemental rates based on multiple factors, including rates offered by non-federal organizations and remoteness of the area, to help attract, recruit, and retain a high caliber workforce. AFC STRL Mod Demo organizations have an

ongoing responsibility to evaluate the need for continuing payment of the supplemental pay and shall terminate or reduce the amount if conditions warrant. Conditions to be considered are: changes in labor-market factors; the need for the services or skills of the employee has reduced to a level that makes it unnecessary to continue payment at the current level; or budgetary considerations make it difficult to continue payment at the current level. Additional guidance will be documented in the AFC STRL Mod Demo organization IOPs.

N. Voluntary Early Retirement (VERA) and Voluntary Separation Incentive Pay (VSIP)

Comment:
A commenter expressed concerns with Voluntary Early Retirement Authority (VERA) and Voluntary Separation Incentive Pay (VSIP) and how the use of “and” in this section indicates the use of VERA and VSIP together and not separately. The commenter believes the section should make it clear that these authorities may be used independently.

Response:
Section III.J, Voluntary Early Retirement Authority and Voluntary Separation Incentives Pay, has been revised to read, “VERA and VSIP will be administered as described in this Notice. Both authorities are authorized and may be used together or separately.

O. Conversion

Comment:
Commenters recommended changes to placement of some GS-14 employees into band III upon conversion. Additionally, commenters asked if the same rules for GS-14 employees apply to GS-13 or GS-12 employees who fall within Pay Band III.

Response:
Section IV.A, Conversion into the Demonstration Project, has been revised to read, “The placement of GS-14 employees will be in Pay Band IV during initial conversion into AFC STRL Mod Demo. Additional guidance will be included in Mod Demo IOPs, and conversion operations will be overseen by the PMB.” This language clarifies that employees whose grade falls within two pay bands (
i.e.,
GS-14) will be placed in the higher pay band during conversion. Such guidance is not applicable to GS-13 and GS-12 grades which fall within Pay Band III.

Comment:
A commenter asked if current employees hired under the Highly Qualified Expert authority will be converted to AFC STRL Mod Demo.

Response:
No changes to the Notice were made based on these comments. Employees appointed using Highly Qualified Expert (HQE) authority will not convert into the AFC STRL Mod Demo.

Comment:
A commenter expressed concern because Defense Civilian Intelligence Personnel System (DCIPS) employees are ineligible to convert to GS positions and asked whether AFC STRL Mod Demo employees will be eligible to apply for and convert to GS positions.

Response:
No changes to the Notice were made based on these comments. Unlike DCIPS positions which are in the excepted service, AFC STRL Mod Demo positions are in the competitive service and employees are eligible to convert to other competitive service positions.

Comment:
Commenters asked how conversion will work if an employee is already paid at the top of a pay scale (
e.g.,
GS-11 step 10) and will that employee be converted into the next pay band. Additionally, commenters asked how salary will be determined if a GS-13 and GS-14 converting in if both employees received the same rating, perform the same duties, and have the same responsibilities. Lastly, commenters asked whether an employee who is performing satisfactorily may be placed in a lower pay band within the same career path or placed into a pay band in a different career path with a lower pay.

Response:
No changes to the Notice were made based on these comments. Employees will convert into the pay band that encompasses their current GS Grade. Positions in a higher pay band will have more complex duties and responsibilities and will have different performance objectives than similar positions in a lower pay band.

Comment:
A commenter requested wording be added to address employee conversion from a current demo (ARL STRL and Acquisition Demonstration) into the AFC STRL Mod Demo.

Response:
Section IV.A, Conversion into the Demonstration Project, was revised to address this comment by adding the following language, “Organizational conversion to the AFC STRL Mod Demo occurs when a new organization or a group of employees convert into the demonstration project. Conversion from current GS grade or other pay banding system into AFC STRL Mod Demo will be accomplished during implementation of the demonstration project. Initial entry into the demonstration project will be accomplished through a full employee-protection approach that ensures each employee an initial place in the appropriate career path and pay band without loss of pay or earning potential.”

Comment:
Commenters expressed myriad concerns about converting GS-14 positions to Pay Band III.

Response:
Section IV.A has been revised to require conversion of all employees who are currently in GS-14 positions to pay band IV. All employees currently on GS-12 and GS-13 positions will move into pay band III. Section III.H.12, Accelerated Compensation for Developmental Positions section, has been revised to state, “The AFC STRL Mod Demo organizations may authorize an increase to basic pay for employees participating in training programs, internships, or other development capacities. This may include employees in positions that cross bands within a career path (formally known as career ladder positions) or developmental positions within a band. ACDP will be used to recognize development of job-related competencies as evidenced by successful performance within AFC STRL Mod Demo. Additional guidance will be published in an IOPs.” AFC researched and utilized best practices from organizations across DoD, including the AFC Enterprise organizations currently operating STRL demonstration projects. The pay band structure supports progression across journey level positions. The AFC STRL Mod Demo is designed to reflect different organizational mission requirements along with career progression for S&E and B&T career paths and has been successfully implemented in other STRL demonstration projects.

Section IV.A., Conversion into the Demonstration Project, has been revised to state, “The placement of GS-14 employees will be in Pay Band IV during initial conversion into AFC STRL Mod Demo. After initial conversion, GS-14's will be assigned based on classification requirements. Additional guidance will be included in AFC STRL Mod Demo IOPs, and conversion operations will be overseen by the PMB.” GS-14s in Pay Band IV will have competitive advantage based on the complexity of work and duties and responsibilities they are required to perform. There are multiple factors considered prior to moving a person from one position to another. An employee must compete for a higher banded position unless the employee meets the “Exceptions to Competitive Procedures for Assignment to a Position” listed in the FRN.

Comment:
Commenters expressed concerns with grade and pay retention entitlements being eliminated at the time of conversion into the demonstration project.

Response:
Section IV.A, Conversion into the Demonstration Project, has been revised to state, “The project will eliminate retained grade under 5 U.S.C. 5362 and 5 CFR part 536. At the time of conversion, an employee on grade retention will be converted to the career path and broadband level based on the assigned permanent position of record, not the retained grade, and placed on pay retention. Pay retention will follow current law and regulations at 5 U.S.C. 5363 and 5 CFR part 536, except as modified in the Staffing Supplements section and waived in Section IX of this plan. Additionally, section III.H, Pay Setting, is revised to add section III.H.10., Grade and Pay Retention.

P. Demonstration Project Costs

Comment:
A commenter asked if the cost numbers were adjusted for inflation in Figure 7 since the numbers appeared similar across fiscal years. The commenter further asked whether other costs associated with the demonstration project were adjusted for inflation.

Response:
No changes to the Notice were made based on these comments. Inflation was considered in calculating the development costs in Figure 7.

Q. Appendix A: Occupational Series by Career Path

Comment:
Some commenters expressed concerns about inaccuracies or inconsistencies in occupational series, career paths, position titles, and use of asterisks.

Response:
All occupational series within AFC STRL Mod Demo organizations were reviewed and Appendix A has been revised to add missing occupational series and designate appropriate career paths. Additionally, asterisks were added for those occupational series that currently have employees assigned. The titles of positions were not changed. AFC STRL Mod Demo utilized the OPM classification standards for identification of the position title and occupational series. Based on the series determination(s), positions will be assigned to a specific career path,
i.e.,
Science & Engineering (Pay Plan DB), Business & Technical (Pay Plan DE), or Support (Pay Plan DK). The AFC STRL Mod Demo utilized OPM career occupation coverage as a guideline to assign series to each career path. Lastly, all current series for AFC and CFT employees will be included under AFC STRL Mod Demo and will cover the mission capabilities and validation requirements. The professional occupational career paths for AFC STRL Mod Demo are the same as the OPM Professional Career Occupational Coverage.

R. Other Comments

Comment:
A commenter asked if conversion to the STRL would affect leave.

Response:
No changes to the Notice were made based on these comments. Leave entitlements are not impacted by conversion into the AFC STRL Mod Demo.

Comment:
Commenters cited high costs of living in Austin locality and inquired whether AFC STRL Mod Demo can address this if the control points within the pay bands mimic the GS pay system. Additionally, commenters asked how AFC STRL Mod Demo will cover the shortfall if this wasn't included in the POM for the conversion costs. Furthermore, commenters asked why AFC hasn't considered moving AFC HQ to another location that would be more cost effective.

Response:
No changes to the Notice were made based on these comments. Locality pay for specific areas and the location of AFC HQ is beyond the scope of the AFC STRL Mod Demo Notice.

Comment:
A commenter asked why Reduction in Force (RIF) information is not included in the FRN and asked how Mod Demo will implement a RIF.

Response:
No changes to the Notice were made based on these comments. All DoD STRLs follow the RIF guidance at 87 FR 58334. Organization-specific RIF policies will be documented in AFC STRL Mod Demo organization IOPs.

Comment:
A commenter asked for data that shows the changes to employees' career tracks and how that may negatively affect employees. Additionally, commenters stated the goals of the program have no baseline and asked what privileges or rights will be lost in comparison to other Federal employees.

Response:
No changes to the Notice were made based on these comments. AFC STRL Mod Demo will not change employee career tracks. The pay band system provides more opportunities for advancement. There are more hiring and pay flexibilities under AFC STRL Mod Demo than the current GS system.

Comment:
A commenter stated if civilians are covered by pay bands, then military members should be as well, to align civilian and military rank structure.

Response:
No changes to the Notice were made based on these comments. The Notice implements STRL authorities to expeditiously hire and retain highly qualified civilian employees.

Comment:
Commenters asked about bargaining unit negotiations, pay structure, and other decisions that are part of the bargaining process and specifically whether bargaining unit members would convert if the union does not agree to the project.

Response:
No changes to the Notice were made based on these comments. Bargaining unit employees will not convert into the AFC STRL Mod Demo until any applicable labor obligations have been met.

Comment:
Commenters asked if an employee with performance issues could lose their annual general pay increase (
i.e.,
cost of living increase) and whether the locality pay adjustment could be denied.

Response:
No changes to the Notice were made based on these comments. As stated in section III.D.12., “Employees, who are on a performance improvement plan and/or receive a Level 1 rating of record at the time pay determinations are made, may be denied performance payouts or the general pay increase.” When the employee has performed at an acceptable level for at least 90 days, the general pay increase (GPI) will not be retroactive but will be granted at the beginning of the next pay period after the supervisor authorizes its payment. Employees remain entitled to the locality pay adjustment no matter the rating received. AFC STRL Mod Demo is moving away from the GS pay system to ensure employees are rewarded based on performance.

Comment:
Commenters asked what was meant by “shall be as defined under applicable U.S. OPM operating rules and regulations.” Additionally, a commenter asked if current job descriptions from the GS system will be changed for any or all employees.

Response:
No changes to the Notice were made based on these comments. AFC STRL Mod Demo will exercise authorities that are not specifically addressed in the Notice pursuant to applicable OPM and DoD regulations. Employees converting to Mod Demo will be reassigned to new Mod Demo position descriptions.

Comment:
Some commenters expressed a need to evaluate AFC STRL Mod Demo in future years to ensure continued fairness and equity and to verify that the STRL is still beneficial to the AFC mission and organizations and questioned whether unions or a neutral third party would be involved in the evaluation. Commenters also expressed a need to value years of experience and offset supervisors' biases and perceptions. Additionally, commenters suggested providing guaranteed increases and bonuses on top of the base

pay for those performing well to promote retention.

Response:
No changes to the Notice were made based on these comments. Selection of candidates and other personnel actions will continue to be based on merit system principles. AFC STRL Mod Demo has incorporated an EEO/diversity, equity, and inclusion element as one of the mandatory supervisor performance objectives. Additionally, AFC STRL Mod Demo will provide supervisor and leadership training to develop capabilities and skills to better engage employees. AFC STRL Mod Demo will evaluate the project within five years of implementation of the project in accordance with 5 U.S.C. chapter 47. Data will be collected internally and externally based on standards and guidelines developed by the USD(R&E). Furthermore, AFC STRL Mod Demo will collect climate survey data. Results of evaluation data will be provided to the USD(R&E) and the AFC STRL Mod Demo workforce, as appropriate. Each year the PMB will review the STRL policies to determine if changes are needed. Each organization will work with its respective union to ensure bargaining union requirements are met and union input is captured appropriately.

Comment:
Commenters questioned expanding the scope of the career fields covered by AFC STRL Mod Demo from scientific and technical career fields to include administrative and other professional areas.

Response:
No changes to the Notice were made based on these comments. STRLs are not just pursuing scientific and engineering talent, but all talent, ensuring there are always qualified administrative and other professional staff to support the STEM mission.

Comment:
A commenter suggested the use of direct hire authorities is inconsistent with merit system principles for promoting transparent, fair, and open competition and that direct hire is often a closed, virtually non-competitive program that promotes the hiring of friends and acquaintances and allows use of other than merit-based factors in selecting employees and candidates.

Response:
No changes to the Notice were made based on these comments. The Department has a long history of successfully using direct hire authorities, consistent with merit system principles, to meet its critical national security workforce needs. Innovative research is critical to preparing DoD to meet the challenges of the future.

Table of Contents

I. Executive Summary

II. Introduction

A. Purpose

B. Problems With the Present System

C. Changes Required/Expected Benefits

D. Participating Organizations

E. Participating Employees and Union Representation

F. Project Design

G. Personnel Management Board (PMB)

H. Organizational Structure and Design

I. Funding Levels

III. Personnel System Changes

A. Levels of Authority and Responsibility

B. Pay Banding

C. Classification

D. Pay-for-Performance Management System

E. Hiring and Appointment Authorities

F. Volunteer Emeritus and Expert Program (VEP)

G. Internal Placement

H. Pay Setting

I. Employee Development

J. Voluntary Early Retirement (VERA) and Voluntary Separation Incentive Pay (VSIP)

IV. Conversion

A. Conversion Into the Demonstration Project

B. Conversion or Movement From a Project Position to a General Schedule Position

V. Implementation Training

VI. Project Maintenance and Changes

VII. Evaluation Plan

A. Overview

B. Evaluation Model

C. Method of Data Collection

VIII. Demonstration Project Costs

IX. Required Waivers to Laws and Regulations

A. Title 5, United States Code

B. Title 5, Code of Federal Regulations

Appendix A: Occupational Series in Each Pay Band

Appendix B: List of Local Unions

I. Executive Summary

AFC leads a continuous transformation of Army modernization in order to provide future warfighters with the concepts, capabilities, and organizational structures they need to dominate a future battlefield. AFC is the newest Army Command, established in 2018 when the Army consolidated many of its laboratories, concepts development centers, and innovation elements under one command structure.

Although the organizations comprising the AFC STRL share the same overarching modernization mission, their specific alignments, structures, and workforces differ dramatically. The organizations include two large headquarters elements, two analysis centers, multiple cross functional teams, and two concepts and capabilities development organizations. They all share the urgent need for a high-quality, contemporary, flexible personnel management system to attract, motivate, train, and retain a top-performing science, technology, and modernization workforce.

The goal of the AFC STRL Mod Demo is to make AFC STRL a premier employer with growth opportunities, competitive pay, and management flexibilities to take care of both employees and the mission. The AFC STRL Mod Demo features pay banding, performance-based compensation, flexible hiring, and a modern approach to career progression and assignments.

II. Introduction

A. Purpose

The purpose of STRL personnel demonstration project is to demonstrate that the effectiveness of DoD STRLs can be enhanced by expanding opportunities available to employees and by allowing greater managerial control over personnel functions through a more responsive and flexible personnel system. A top-tier workforce is essential to the AFC STRL's efforts towards achieving technological innovation and modernization for the Army. AFC STRL needs a contemporary, flexible personnel management system to attract, motivate, train, and retain a top-performing science, technology, and modernization workforce. The goal of this project is to ensure AFC STRL remains a premiere employer with growth opportunities, appropriate pay, and management flexibility to take care of both employees and the mission.

While many aspects of a demonstration project were once considered experimental, many have been implemented in various DoD laboratories for several years, including other STRLs within AFC. Modifications to the initial project plans have been made based on the implementation experience of these laboratories, best practices, and formative evaluation efforts. Additional modifications may be needed from time to time, as additional experience is gained and based on evaluations of how the system is working to meet the goals and objectives of the personnel demonstration project.

B. Problems With the Present System

The current Civil Service GS system has 15 grades with 10 levels each and involves lengthy, narrative, individual position descriptions, which must be classified by complex 5 CFR classification standards. Base pay is set at one of those fifteen grades and the ten interim steps within each grade. The Classification Act of 1949 rigidly defines types of work by occupational series and grade, with very precise

qualifications for each job. This system does not quickly or easily respond to new ways of designing work and changes in the work itself. Changes to the classification and pay system would enable greater management control to create new types of jobs that respond to the fast-changing world of modernization work in which AFC STRL is engaged.

In addition to classification issues, the GS system's approach to career flexibility, progression, and changing work assignments is rigid, slow, and designed for industrial-era employees who entered Civil Service and remained until retirement. Modern employees expect careers that include frequent company changes, new challenges, and work-life balance fluctuations that do not require staying with a single employer. Allowing employees to move in and out of Civil Service while minimizing career impact would give AFC STRL access to an additional pool of scientists, engineers, and technical personnel, even when they have changing life circumstances. It would also increase information exchange between AFC STRL and industry.

The speed with which new science, technology, and engineering concepts emerge demands the ability to quickly re-shape work assignments, re-train employees, and maximize the potential of the existing workforce. Internal reassignments and promotions under the GS system are also rigid, and limitations on training further hamper efforts to respond to the rapid changes in the modernization mission.

C. Changes Required/Expected Benefits

The primary benefit expected from this demonstration project is greater organizational effectiveness through increased employee satisfaction. The long-standing Department of the Navy “China Lake” and subsequent demonstration projects have produced impressive statistics on increased job satisfaction and quality of employees versus that of the Federal workforce in general. Similar results have been demonstrated in more recent STRL demonstration projects and other alternative personnel systems implemented in the DoD and other agencies.

This project will demonstrate that a human resource system tailored to the mission and needs of the modernization workforce will facilitate:

(1) Increased quality in the workforce;

(2) More effective, efficient, and adaptable organizational systems;

(3) Improved timeliness of key personnel processes;

(4) Increased retention of excellent performers;

(5) Increased success in recruitment of personnel with critical skills;

(6) Increased information exchange between AFC STRL and industry;

(7) Increased permeability between Civil Service and industry; and

(8) Increased workforce satisfaction and engagement.

D. Participating Organizations

AFC STRL currently has employees located in twenty-one states and several countries. Just over half are spread across Aberdeen Proving Ground (Maryland), Austin (Texas), and White Sands Missile Range (New Mexico), with most of the remaining employees in Kansas, Virginia, Oklahoma, Georgia, Missouri, Alabama, Michigan, and other parts of Texas.

AFC STRL is comprised of multiple AFC organizations; the remaining AFC organizations are covered by independent STRL personnel demonstration projects. The AFC STRL is comprised of the organizations listed below (hereinafter referred to as “AFC STRL organizations,” and their components.

(1) AFC Headquarters and Headquarters Components (AFC HHC), which includes AFC Headquarters (HQ), AFC Support Battalion (AFCSB), Army Software Factory (ASWF), Artificial Intelligence Integration Center (AI2C), Army Applications Lab (AAL), and Acquisition & Systems (A&S) Directorate.

(2) AFC Cross Functional Teams (AFC CFTs), which includes Long Range Precision Fires (LRPF CFT); Next Generation Combat Vehicle (NGCV CFT); Future Vertical Lift (FVL CFT); Network Command Control Communications Integration (NC3I); Assured Positioning, Navigation and Timing/Space (APNT/S CFT); Air and Missile Defense (AMD CFT); Soldier Lethality (SL CFT); and Synthetic Training Environment (STE CFT).

(3) The Research and Analysis Center (TRAC).

(4) Futures and Concepts Center (FCC), which includes Joint Modernization Command (JMC) and the Capability Development Integration Directorates (CDIDs).

(5) Combat Capabilities Development Command (CCDC) Headquarters (also known as DEVCOM Headquarters).

(6) The DEVCOM Analysis Center (DAC).

E. Participating Employees and Union Representation

This demonstration project will cover civilian employees appointed under Title 5 U.S.C. in the occupations listed in Appendix A. Additional employees and other occupations may be added after implementation of the project. The project plan does not cover members of the Senior Executive Service (SES), Senior Level (SL) employees, Scientific and Professional (ST) employees, Federal Wage System employees, and employees presently covered by the Defense Civilian Intelligence Personnel System or Physicians and Dentists Pay Plan.

Department of the Army (DA), Army Command centrally funded, local interns, and Pathways Program employees may be converted to the demonstration project if assigned to an AFC STRL organization. Additional guidance will be included in the Mod Demo IOPs.

Sixteen local and/or national unions, from American Federation of Government Employees (AFGE), Laborer's International Union of North America (LIUNA), National Federation of Federal Employees (NFFE), National Association of Government Employees (NAGE), and National Association of Independent Labor (NAIL), cover approximately 30% of employees in the AFC STRL. A full list of the local unions is provided at Appendix B. AFC STRL organizations will continue to fulfill their obligations to consult and/or negotiate with all labor organizations in accordance with 5 U.S.C. 4703(f) and 7117 for bargaining unit participation.

F. Project Design

The AFC CG/AFC STRL Director leveraged the knowledge of experienced and tenured STRL leaders within the greater AFC organization to finalize the AFC STRL Mod Demo project plan. In consultation with members of the Laboratory Quality Enhancement Program Personnel Subpanel, other DoD laboratories, Army G1, Army Civilian Human Resources Agency, and a host of other knowledgeable agencies and personnel, the AFC STRL operational planning team conducted a comprehensive review of personnel flexibilities used in existing DoD laboratories and other government agencies. It also analyzed organizational needs and considered innovative personnel practices used outside of the federal government to develop proposed flexibilities for the AFC STRL Mod Demo.

AFC STRL employed an executive Board of Directors comprised of leaders from across the AFC STRL to accommodate the differing needs of AFC STRL organizations, and a Council of Champions led by the AFC CG/AFC STRL Director to ensure all proposals

support AFC STRL's strategic needs. Collaboration and oversight by Army and DoD ensured alignment with Departmental goals.

The resulting project design for Mod Demo will be overseen by the AFC CG/AFC STRL Director. It will be implemented through six organization-specific Internal Operating Procedures (IOPs) and a single Mod Demo Personnel Management Board (PMB). Each of the AFC STRL organizations listed in Paragraph D will have its own IOP. Authority to draft, modify, implement, negotiate, and approve each IOP shall rest with these organizations. A review of these Mod Demo IOPs will be completed by the servicing legal office prior to approval. The IOP will be distributed to the workforce for information, prior to STRL implementation.

Any responsibilities and authorities normally associated with STRL Directors that are not specifically defined in this Notice shall be as defined under applicable U.S. OPM operating rules and regulations. Additional information on delegated authorities and the project structure are included in Section III.

G. Personnel Management Board (PMB)

AFC STRL will create a Mod Demo PMB to oversee and monitor the fair and equitable implementation of the provisions of the demonstration project, including establishment of internal controls and accountability. The board will consist of the AFC Executive Deputy to the Commanding General (EDCG), as PMB Chair, and officials from the AFC STRL organizations listed in Paragraph D. PMB members will be appointed in accordance with this
Federal Register
Notice and IOPs will include measures for ensuring a variety of perspectives are represented. The names of PMB members will be provided to the workforce. The AFC EDCG may delegate membership, add, remove, or change the membership of the PMB, in accordance with the evolution of the AFC STRL Mod Demo. The PMB may also include experts in Human Resources, Resource Management, or other relevant areas, as appointed by the AFC EDCG.

Based on guidance and consistent interaction with the AFC EDCG, the board will execute the following:

(1) Oversee the implementation guidance and procedures in all aspects of the Mod Demo program in accordance with the direction given by the AFC CG/AFC STRL Director;

(2) Issue top-level guidelines for AFC STRL organizations to establish and implement pay pools;

(3) Review pay pool results for equity and conformance, on an annual basis;

(4) Resolve administrative pay pool disputes that are not resolved through other means;

(5) Establish guidelines for the use of retention counteroffers;

(6) Review and approve the assignment of new occupational series to a pay band, if necessary;

(7) Establish guidelines for exceptions to base pay increases, such as Extraordinary Achievement Rewards and Distinguished Contribution Allowances;

(8) Establish guidelines for the Voluntary Emeritus/Expert Program;

(9) Modify the Standard Performance Elements, as needed;

(10) Establish guidelines for the use of subject matter expert qualifications for exceptional experience;

(11) Approve any performance-based rules created and administered by AFC STRL organizations, prior to their implementation;

(12) Assess the need for changes to demonstration project procedures and policies and provide leadership for efforts to modify this FRN;

(13) Promote collaboration and best practices within Mod Demo;

(14) Review Mod Demo IOPs for equity and conformance;

(15) Track personnel cost changes and recommend adjustments, if required;

(16) Conduct formative evaluations of the project, including those directed by DoD.

In executing these duties and responsibilities, the board will keep in close contact and consultation with the AFC EDCG to ensure policies and procedures are executed consistently throughout Mod Demo and are aligned with AFC STRL strategic objectives.

H. Organizational Structure and Design

To optimize the effectiveness and efficiency of the AFC STRL during the adoption of the new personnel demonstration system, the AFC STRL may review and realign the organization structure to best meet mission needs and requirements. Realignment may include removing limitations in terms of supervisory ratios consistent with 10 U.S.C. 4121, and the alignment and organization of the workforce required to accomplish the mission of the AFC STRL.

In general, the AFC CG/AFC STRL Director will manage the STRL's workforce strength, structure, positions, and compensation without regard to any limitation on appointments, positions, or funding in a manner consistent with the budget available in accordance with 10 U.S.C. 4091.

I. Funding Levels

The Under Secretary of Defense (Personnel & Readiness) may adjust the minimum funding levels to consider factors such as the Department's fiscal condition, guidance from the Office of Management and Budget, and equity in circumstances when funding is reduced or eliminated for GS pay raises or awards.

III. Personnel System Changes

A. Levels of Authority and Responsibility

Due to the unique structural design of this demonstration project, certain responsibilities that are typically reserved for STRL lab directors are assigned to other AFC STRL officials. Such designations are referenced throughout this Notice using the definitions in this section. No responsibilities, authorities, or delegations in this Notice are intended to replace or override command authorities.

Definitions. The following terminology is used throughout this Notice to refer to management and other officials in the AFC STRL.

(1) AFC STRL Director. This term refers to the AFC CG.

(2) AFC STRL organization approval authority. This term refers to the following positions in their respective organizations: AFC EDCG for AFC HQ; AFC Principal Deputy CG for CFT; FCC CG for FCC; Director, TRAC for TRAC; DEVCOM CG for DEVCOM HQ; and Director, DAC for DAC.

(3) PMB Member. This term refers to a member of the PMB, as defined in Section II.G. of this Notice.

(4) Pay Pool Manager. This term refers to the individual who approves the total performance ratings, reviews the ratings of employees within the pay pool for consistency and fairness, resolves any rating issues, and makes final decisions on ratings and payouts.

(5) Pay Pool Panel/Reconciliation Board. This term refers to the group of supervisors/managers who reconcile ratings and payouts for the employees in each pay pool.

B. Pay Banding

The design of the AFC STRL Mod Demo pay band system takes advantage of the exhaustive studies performed by DA and DoD of pay band systems currently practiced in the Federal sector, including those practiced by the Navy's “China Lake” experiment and the National Institute of Standards and Technology. The pay band system will replace the current GS structure. Currently, the fifteen grades of the GS

are used to classify positions and, therefore, to set pay. The GS covers most civilian white-collar Federal employees in professional, technical, administrative, and clerical positions. Changes in this rigid structure are required to allow flexibility in hiring, developing, retaining, and motivating the workforce.

1. Career Paths and Pay Bands

Occupations with similar characteristics will be grouped together into one of three career paths with pay bands designed to facilitate pay progression. Each career path will be composed of pay bands corresponding to recognized advancement and career progression expected within the occupations. Each career path will be divided into three to five pay bands with each pay band covering the same pay range now covered by one or more GS grades. The upper and lower pay rate for base pay of each pay band is defined by the minimum and maximum GS rate for the grade as indicated in Figure 1, except for Level V of the S&E career path. Comparison to the GS grades was used in setting the upper and lower base pay dollar limits of the pay bands. However, once employees are moved into the demonstration project, GS grades will no longer apply.

The occupational series listed in Appendix A served as guidelines in the development of the following three career paths:

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Science and Engineering (S&E) (Pay Plan DB):
This career path includes technical professional positions, such as engineers, physicists, chemists, mathematicians, operations research analysts, and computer scientists. This career path also includes certain Information Technology (IT) (occupational series 2210) positions. It includes such positions that contribute to highly technical and/or scientific programs that reside in the research, development, or engineering domains, using offensive, and defensive cyber competencies. These positions will directly support science and technology initiatives contributing to the development of cyber resilient Army transformation and readiness technologies. These positions include highly skilled and high demand cybersecurity positions such as certified vulnerability assessment blue team and/or National Security Agency certified red team subject matter experts. All other IT specialists will be included in the B&T career path. Specific course work or educational degrees are required for these occupations (except cyber-IT). Five pay bands have been established for the S&E career path:

a. Pay Band I is a student trainee track covering GS-1, step 1 through GS-4, step 10.

b. Pay Band II is a developmental track covering GS-5, step 1 through GS-11, step 10.

c. *Pay Band III includes GS-12, step 1 through GS-14, step 10.

d. *Pay Band IV includes GS-14, step 1 through GS-15, step 10.

e. Pay Band V covers Senior Scientific Technical Manager (SSTM) positions which are described in further detail in paragraph 2 of this section.

* Pay Bands III and IV overlap at the end and start points. These two pay bands have been designed following a feature used by the Navy's “China Lake” project. Prior to implementation, personnel decisions regarding the overlap will be defined in Mod Demo IOPs in accordance with the PMB-approved classification guidance.

Business & Technical (B&T) (Pay Plan DE):
This career path includes such positions as computer specialist, equipment specialist, quality assurance specialist, telecommunications specialist, engineering and electronics technicians, procurement coordinators, finance, accounting, administrative computing, and management analyst. Employees in these positions may or may not require specific course work or educational degrees. Four pay bands have been established for the B&T career path:

a. Pay Band I is a student trainee track covering GS-1, step 1 through GS-4, step 10.

b. Pay Band II includes GS-5, step 1 through GS-11, step 10.

c. *Pay Band III includes GS-12, step 1 through GS-14, step 10.

d. *Pay Band IV includes GS-14, step 1 through GS-15, step 10.

*Pay Bands III and IV overlap at the end and start points. These two levels have been designed following a feature used by the Navy's “China Lake” project. Prior to implementation, personnel decisions regarding the overlap will be defined in the Mod Demo IOPs in accordance with the PMB-approved classification guidance.

Support (Pay Plan DK):
This career path consists of clerical and assistant positions for which specific course work or educational degrees are not required. Clerical work usually involves the processing and maintaining of records. Assistant work requires knowledge of methods and procedures within a specific administrative area.

a. Pay Band I include entry-level positions covering GS-1, step 1 through GS-4, step 10.

b. Pay Band II includes full-performance positions covering GS-5, step 1 through GS-8, step 10.

c. Pay Band III includes senior technicians/assistants/secretaries covering GS-9, step 1 through GS-10, step 10.

2. Senior Scientific Technical Managers (SSTM)

AFC STRL Mod Demo will include a category of SSTM positions, as directed by 10 U.S.C. 4091 and described in 79 FR 43722. S&E Pay Band V will apply

exclusively to positions designated as SSTMs.

The SSTM program will be managed and administered by the AFC EDCG unless delegated in writing to an AFC STRL organization approval authority. These SSTM positions are managed separately from SES, ST, and SL positions. The primary functions of SSTM positions are (a) to engage in research and development in the physical, biological, medical, or engineering sciences, or another field closely related to the mission of such STRL; and (b) to carry out technical supervisory responsibilities. The number of such positions is limited in accordance with 10 U.S.C. 4091. This authority is expected to provide an opportunity for career development and expansion of a pool of experienced, prominent technical candidates meeting the levels of proficiency and leadership essential to create and maintain a DoD state-of-the-art scientific, engineering, and technological capability.

Positions may be filled: (a) On a temporary, term, or permanent basis utilizing appropriate internal and/or external competitive recruitment procedures; (b) through accretion-of-duties promotions; or (c) using a direct hire authority. Positions may also be filled temporarily using non-competitive procedures (
e.g.,
detail and temporary promotions). The AFC CG has the discretion to select the recruitment and staffing method most appropriate based on the specialized position requirements and available candidate pool. However, the recruitment and staffing methodology must include: (a) An internal process which incorporates an impartial, rigorous, and demanding assessment of candidates to evaluate the breadth of their technical expertise; (b) an external recruitment process; (c) creation of panels to assist in filling positions; or (d) other comparable recruitment and/or staffing mechanisms.

Panels will be created to assist in the review of candidates for SSTM positions. Panel members typically will be SES members, ST employees, and those employees designated as SSTMs. In addition, General Officers and recognized technical experts from outside AFC STRL may serve, as appropriate. The panel will apply criteria developed largely from the OPM Research Grade Evaluation Guide for positions exceeding the GS-15 level and other OPM guidance related to positions exceeding the GS-15 level. The purpose of the panel is to ensure impartiality and a rigorous and demanding review.

3. Position Control Points

Control points may be used as a compensation strategy when management determines the duties and responsibilities of a position do not warrant unconstrained salary progression through the entire range of the pay band. If used, control points will be documented on the classified position description. Increasing an employee's salary beyond a control point, if established or used, will require review of both the position and performance of the employee. Advancement across a control point may not occur without approval of the AFC STRL organization approval authority, unless further delegated in the applicable IOP. Additional guidance will be included in the AFC STRL organization specific IOP.

C. Classification

1. Occupational Series

The present GS classification system has over 400 occupational series, which are divided into 23 occupational groupings. AFC STRL currently has positions in 84 occupational series as indicated in Appendix A. Additional occupational series may be added to the AFC STRL Mod Demo, as needed.

2. Classification Standards and Position Description

AFC STRL will utilize OPM classification standards for the identification of proper series and occupational titles of positions within the demonstration project. The grading criteria in those standards will be used as a framework to develop new, simplified, and equitable standards for the purpose of pay band determinations. The objective is to include in the position description the essential criteria for each pay band within each career path by stating the characteristics of the work, the responsibilities of the position, and the competencies required. The classification standard for each career path and pay band will serve as an important component to update existing position descriptions, which will include position-specific information, and provide data element information pertinent to the job. The computer-assisted process will produce information necessary for position descriptions. The new descriptions will be easier to prepare, minimize the amount of writing time, and make the position description a more useful and accurate tool for other personnel management functions.

Specialty work and/or competency codes with corresponding narrative descriptions will be used in position descriptions to further differentiate types of work and the competencies required for positions within a career path and pay band. Each code represents a specialization or type of work within the occupation.

3. Fair Labor Standards Act (FLSA)

FLSA exemption and non-exemption determinations will be consistent with criteria found in 5 CFR part 551. All employees are covered by the FLSA unless their position meets the criteria for exemption. The duties and responsibilities outlined in the classification standards for each pay band will be compared to the FLSA criteria. Generally, the FLSA status can be matched to career path and pay band as indicated in Figure 2. For example, positions classified in pay band I of the S&E career path are typically nonexempt, meaning they are covered by the overtime entitlements prescribed by the FLSA. An exception to this guideline includes supervisors/managers at pay band I or II whose primary duties meet the definitions outlined in the OPM GS Supervisory Guide. Therefore, supervisors/managers in any of the career paths who meet the foregoing criteria generally are exempt from the FLSA. The AFC STRL classification authorities will make the determinations on a case-by-case basis by comparing assigned duties and responsibilities to the classification standards for each career path and the 5 CFR part 551 FLSA criteria. Additionally, the advice and assistance of the servicing personnel office will be obtained in making determinations. The position descriptions will not be the sole basis for the determination. Basis for exemption will be documented and attached to each position description. Exemption criteria will be narrowly construed and applied only to those employees who clearly meet the spirit of the exemption. Changes will be documented and provided to the servicing personnel office.

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Note:

Although typical exemption status under the various pay bands is shown in the above table, actual FLSA exemption determinations are made on a case-by-case basis.

4. Classification Authority

The AFC STRL organizations will have classification authority and may delegate this authority in writing to appropriate levels. Any individual with delegated classification authority must complete required training. Position descriptions will be developed to assist in exercising delegated position classification authority.

Classification authorities will identify the career path, job series, functional code, specialty work and/or competency code, pay band, and other critical information. Human Resources professionals will provide ongoing consultation and guidance to managers and supervisors throughout the classification process. These decisions will be documented in the position description.

5. Classification Appeal

Classification appeals under this demonstration project will be processed using the following procedures: An employee may appeal the determination of career path, occupational series, position title, and pay band of the position at any time. An employee must formally raise the area of concern to supervisors in the immediate chain of command, in writing. If the employee is not satisfied with the supervisory response, the employee may then appeal to the AFC STRL organization PMB representative. An appeal may then be made to the AFC EDCG. If the employee is not satisfied with the AFC EDCG's response to the appeal, a final appeal may then be made to the DoD appellate level. The appeal process will be defined in each Mod Demo IOP. Classification appeals are not accepted on positions which exceed the equivalent of a GS-15 level. Time periods for cases processed under 5 CFR part 511 apply.

The evaluation of classification appeals under this demonstration project are based upon the demonstration project classification criteria. Case files will be forwarded for action through the servicing personnel office and will include copies of appropriate demonstration project criteria.

D. Pay-for-Performance Management System (PFP)

1. Overview

The purpose of the PFP system is to provide an effective, efficient, and flexible method for assessing, compensating, and managing the AFC STRL modernization workforce. It is essential for the development of a high performing workforce and to provide management at the lowest practical level, the authority, control, and flexibility needed to achieve a quality organization and meet mission requirements. PFP allows for more employee involvement in the assessment process, strives to increase communication between supervisor and employee, promotes a clear accountability of performance, facilitates employee career progression, and provides an understandable and rational basis for salary changes by linking pay and performance.

The PFP system uses annual performance payouts that are based on the employee's total performance score rather than within-grade increases, quality step increases, and performance awards. The normal rating period will be one year. The minimum rating period will be 90 days. PFP payouts can be in the form of increases to base pay and/or bonuses that are not added to base salary but rather are given as a lump sum payment. Other awards, such as special acts and time-off awards, will be administered separately from the PFP payouts.

The AFC STRL Mod Demo PFP system may be modified by the PMB, if necessary, as more experience is gained under the project. Each AFC STRL organization will publish the details of its PFP system rules and available funding limits in its IOP and/or annual PFP guidance.

2. Performance Elements

Performance elements define common performance characteristics that will be used to evaluate the employee's success in accomplishing performance objectives. The use of common characteristics for scoring purposes helps to ensure comparable scores are assigned while accommodating diverse individual objectives. The PFP system will utilize those performance elements as described in this FRN. AFC STRL organizations can determine which elements are critical. A critical performance element is defined as an attribute of job performance that is of sufficient importance that performance below the minimally acceptable level requires remedial action and may be the basis for removing employees from their positions. Each of the performance elements will be assigned a two-digit weight between 0 and 1 rounding two significant digits, which reflects its importance in accomplishing an individual's performance objectives. A minimum weight is set for each performance element. The sum of the weights for all the elements must equal 1.0. Rules for setting weights will be defined in Mod Demo IOPs.

A single set of performance elements will be used for evaluating the annual performance of all AFC STRL personnel covered by this Mod Demo plan. This set of performance elements may evolve over time, based on experience gained during each rating cycle. This evolution is essential to capture the critical characteristics the organization encourages in its workforce toward meeting individual and organizational objectives. This is particularly true in an

environment where technology and work processes are changing at an increasingly rapid pace. The PMB may adjust the elements annually.

The initial set of performance elements and basic definitions for the AFC STRL Mod Demo are listed below. On an annual basis, AFC STRL organizations will select at least four elements based on mission requirements. Additionally, the Supervision/EEO element is mandatory, and may be updated as needed, for all employees whose assigned duties which meet the definition of Supervisor, outlined in the OPM GS Supervisory Guide. AFC STRL organizations will publish more specific element definitions and benchmark performance standards that describe performance associated with each score level in their IOPs.

(1) Technical Competence—The extent to which an employee demonstrates the technical knowledge, skills, abilities, and initiative to produce the quality and quantity of work as defined in individual performance objectives and assigned tasks.

(2) Mission Impact—The extent to which an employee demonstrates individual performance against strategic goals and initiatives as defined in individual performance objectives and assigned tasks.

(3) Customer Satisfaction—The extent to which an employee delivers high levels of service to internal and external customers/stakeholders. Maintains quality customer/stakeholder relationship(s).

(4) Management of Time and Resources—The extent to which an employee demonstrates ability to manage time and resources.

(5) Teamwork—The extent to which an employee encourages and facilitates cooperation, collaboration, pride, trust, and group identity; fosters commitment and esprit-de-corps; works with others to achieve goals.

(6) Communication—The extent to which an employee demonstrates ability to communicate orally and in writing to achieve mutual understanding or desired results.

(7) Management/Leadership—The extent to which an employee influences, motivates, and challenges others; adapts leadership styles to a variety of situations.

(8) Supervision/EEO—The extent to which a supervisor: (1) Ensures compliance with applicable laws, regulations and policies including Merit System Principles and Prohibited Personnel Practices; (2) Attracts and retains a high-caliber workforce and acts in a responsible and timely manner on all steps in the recruitment and hiring process; (3) Provides opportunities for orientation and tools for enabling employees to successfully perform during the probationary period and beyond; (4) Completes all performance management tasks in a timely manner including clearly communicating performance expectations throughout the appraisal period, holding employees accountable, making meaningful distinctions in performance and rewarding excellent performance, promoting employee development and training, and promptly addressing performance and conduct issues; (5) Ensures that EEO principles are adhered to throughout the organization and promptly addresses allegations of discrimination, harassment, and retaliation; (6) Upholds high standards of integrity and ethical behavior, including: ensuring appropriate internal controls to prevent fraud, waste or abuse; safeguarding assigned property/resources; maintaining a safe work environment and promptly addressing allegations of noncompliance; and supporting the Whistleblower Protection Program by responding constructively to employees who make protected disclosure under 5 U.S.C. 2302(b)(8), taking responsible and appropriate actions to resolve any such disclosure, and creating an environment in which employees feel comfortable making such disclosures; and (7) Influences, motivates, and challenges others through adaptive leadership; takes charge of assigned effort(s); overcomes challenges to success; resolves personal and professional conflicts; and looks for opportunities to assist others to achieve success.

3. Performance Objectives

Performance objectives define a target level of activity, expressed as a tangible, measurable objective, against which actual achievement can be compared. These objectives will specifically identify what is expected of the employee during the rating period and will typically consist of three to ten results-oriented statements. The employee and the supervisor will jointly develop the employee's performance objectives at the beginning of the rating period. If there is a disagreement between the employee and supervisor concerning these performance objectives, the employee's supervisor will render the final decision on the disagreement after fully considering the employee's comments. Objectives are to be reflective of the employee's duties/responsibilities and pay band along with the mission/organizational goals and priorities. Objectives will be reviewed annually and revised upon changes in salary reflecting increased responsibilities commensurate with salary increases. Performance objectives are intended to define an individual's specific responsibilities and expected accomplishments. In contrast, performance elements will identify common performance characteristics, against which the accomplishment of objectives will be measured. As a part of this demonstration project, training focused on overall organizational objectives, and the development of performance objectives will be held for both supervisors and employees. Performance objectives may be jointly modified, changed, or deleted as appropriate during the rating cycle. Generally, performance objectives should only be changed when circumstances outside the employee's control prevent or hamper the accomplishment of the original objectives. It is also appropriate to change objectives when mission or workload shifts occur.

4. Performance Feedback and Formal Ratings

The most effective means of communication is person-to-person discussion between supervisors and employees of requirements, performance goals, and desired results. Employees and supervisors alike are expected to actively participate in these discussions for optimum clarity regarding expectations and identify potential obstacles to meeting goals. In addition, employees should explain (to the extent possible) what they need from their supervisor to support goal accomplishment. The timing of these discussions will vary based on the nature of work performed but will occur at least at the mid-point and end of the rating period. The supervisor and employee will discuss job performance and accomplishments in relation to the performance objectives and elements. At least one review, normally the mid-point review, will be documented as a formal progress review. More frequent task-specific discussions may be appropriate. In cases where work is accomplished by a team, team discussions regarding goals and expectations may be appropriate.

The employee will provide a written list of accomplishments to the supervisor at both the mid-point and end of the rating period. An employee may elect to provide self-ratings on the performance elements and/or solicit input from team members, customers, peers, supervisors in other units, subordinates, and other sources which will permit the supervisor to fully

evaluate accomplishments during the rating period.

At the end of the rating period, following a review of the employee's accomplishments, the supervisor will rate each of the performance elements by assigning a score between 0 and 50. Benchmark performance standards will be developed by the AFC STRL organization to describe the level of performance associated with a score. Supervisors will use the benchmark performance standards to determine appropriate ratings for each performance element. These scores will not be discussed with the employee or considered final until all scores are reconciled and approved by the designated Pay Pool Manager. The element scores will then be multiplied by the element-weighting factor to determine the weighted score expressed to two decimal points. The weighted scores for each element will then be totaled to determine each employee's overall appraisal score and rounded to a whole number as follows: if the digit to the right of the decimal is between five and nine, it should be rounded to the next higher whole number; if the digit to the right of the decimal is between one and four, it should be dropped.

A total score of 10 or below will result in a Level 1 rating of record. A score of 10 or below in a single element will also result in a Level 1 rating of record with zero shares and no GPI, and requires the employee be placed on a Performance Improvement Plan (PIP). A new rating of record will be issued if the employee's performance improves to an acceptable level at the conclusion of the PIP.

5. Unacceptable Performance

Informal feedback is an effective way to provide clarity to the employee and in-the-moment coaching. Additionally, informal discussions serve several purposes. For example, such discussions provide feedback for a specific job, set and reset goals, reinforce good habits, and discuss areas for improvement. Informal employee performance discussions will be a continuous process so that corrective action, including placing an employee on a PIP, may be taken at any time during the rating cycle. Whenever a supervisor recognizes an employee's performance on one or more performance elements is unacceptable, the supervisor should immediately inform the employee. Efforts will be made to identify the possible reasons for the unacceptable performance.

If the employee continues to perform at an unacceptable level or has received a Level 1 Rating of Record, written notification outlining the unacceptable performance will be provided to the employee. At this point an opportunity to improve will be structured in a PIP. The supervisor will identify the actions that need to be corrected or improved, outline required time frames (no less than 30 days) to demonstrate such improvement and provide the employee with any available assistance as appropriate. Progress will be monitored during the PIP, and all counseling sessions will be documented.

If the employee's performance is acceptable at the conclusion of the PIP, a new rating of record will be issued. If a PIP ends prior to the end of the annual performance cycle and the employee's performance improves to an acceptable level, the employee is appraised again at the end of the annual performance cycle.

If the employee fails to improve during the PIP, the employee will be given written notice of proposed action. This action can include removal from the Federal service, placement in a lower pay band with a corresponding reduction in pay (demotion), reduction in pay within the same pay band, or change in position or career path. For the most part, employees with a Level 1 rating of record will not be permitted to remain at their current salary and may be reduced in pay band.

Note:

Nothing in this subsection will preclude action under 5 U.S.C. chapter 75, when appropriate.

All relevant documentation concerning a reduction in pay or removal based on unacceptable performance will be preserved and made available for review by the affected employee or a designated representative. As a minimum, the record will consist of a copy of the notice of proposed personnel action, the employee's written reply, if provided, or a written summary when the employee makes an oral reply. Additionally, the record will contain the written notice of decision and the reasons therefore along with any supporting material (including documentation regarding the opportunity afforded the employee to demonstrate improved performance).

If the employee's performance deteriorates to an unacceptable level, in any element, within two years from the beginning of a PIP, follow-on actions may be initiated with no additional opportunity to improve. If an employee's performance is at an acceptable level for two years from the beginning of the PIP and performance once again declines to an unacceptable level, the employee will be given an additional opportunity to improve before management proposes follow-on actions.

Additional details will be outlined in Mod Demo IOPs.

6. Reconciliation Process

At the end of the rating cycle and following the initial scoring of each employee by the supervisor, a panel of rating officials and supervisors, known as the pay pool panel, will meet in a structured review and reconciliation process managed by the Pay Pool Manager. In this step, each employee's performance objectives, accomplishments, preliminary scores and/or shares, and pay are discussed. Through discussion and consensus building, consistent and equitable ratings and/or shares are reached. There will not be a prescribed distribution of total scores. IOPs will further define this process.

7. Pay Pools

Employees within the AFC STRL Mod Demo will be placed into pay pools. Pay pools are combinations of organizational elements (
e.g.,
Directorates, Divisions, Branches, and Offices) that are defined for the purpose of determining performance payouts under the PFP system. The guidelines in the next paragraph are provided for determining pay pools. These guidelines will normally be followed. However, an AFC STRL Mod Demo pay pool manager may deviate from the guidelines if there is a compelling need to do so, and the rationale is documented in writing.

The AFC STRL organizations will establish pay pools within their respective organizations. Typically, pay pools will have between 35 and 300 employees. A pay pool should be large enough to encompass a reasonable distribution of ratings but not so large as to compromise rating consistency. Supervisory personnel will be placed in a pay pool separate from subordinate non-supervisory personnel. Neither the Pay Pool Manager nor supervisors within a pay pool will recommend or set their own individual pay. Decisions regarding the amount of the performance payout are based on the established formal payout calculations.

Annual pay pool limits for base pay increases and bonuses, also referred to as payout factors, will be established by the AFC STRL organizations. Funds for performance payouts are divided into two components: base pay increases and bonuses. The funds used for base pay increases are those that would have been available from GS within-grade increases, quality step increases, and promotions. This amount will be defined based on historical data and set

at no less than two percent of total adjusted base pay and no more than the maximum set by the AFC STRL organization. The funds available to be used for awards are funded separately within the constraints of the organization's overall award budget. This amount will be defined based on historical data and set at no less than one percent of total adjusted base pay and no more than the maximum set by the AFC STRL organization. The sum of these two factors is referred to as the Pay Pool Payout Factor and is determined by the AFC STRL organization within the above constraints. The PMB will annually review the pay pool funding formulas used by AFC STRL organizations and recommend adjustments to ensure cost discipline over the life of the demonstration project. AFC STRL organizations may reallocate the amount of funds assigned to each pay pool as necessary to ensure equity and to meet unusual circumstances.

8. Performance Payout Determination

Employee's Rating of Record levels will be determined by the Score Ranges as shown in Figure 3 below. The Rating of Record levels follow the Summary level rating patterns associated with 5 CFR 430.208, Pattern H. Mod Demo IOPs may designate descriptive titles for Level 1 through Level 5 ratings of record. The score ranges will be used as a guide to determine the number of shares the employee is assigned in the pay pool process. An employee will receive a performance payout as a percentage of the employee's salary at the end of the rating cycle, based on the number of shares assigned. AFC STRL organizations will use one of two methods for converting scores to shares. Score ranges and share option changes must be approved by the Mod Demo PMB. IOPs must state which method the AFC STRL organization will use, and Mod Demo employees will receive specific training covering this topic. AFC STRL organizations will provide written notice to the workforce at the start of the rating cycle concerning the basis of the share assignment.

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Shares values will be assigned between 0 and 4 using any increment of shares for a given Score Range as shown in Figure 4. The pay pool panel will determine the shares based on the employee's score range. When selecting the share value, the pay pool panel may consider any of the following: the employee's salary relative to other employees in the same range, the employee's performance above and beyond expectations, the supervisor's recommendation, and how close the employee is to the top of the pay band.

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Shares will be awarded as decimal numbers, rounded to the nearest tenth, based on the employee's score. Fractional shares will be awarded for scores that fall in between these scores, in accordance with Figure 5. For example: a score of 38 will equate to 1.8 shares, and a score of 44 will equate to 2.4 shares.

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Regardless of whether Option A or Option B is implemented, the value of a share cannot be exactly determined until the rating and reconciliation process is completed and all scores are finalized. The formula that computes the value of each share is based on (1) the payout factors, (2) the employee's pay, and (3) the number of shares awarded to each employee in the pay pool. This formula, shown in Figure 6, assures that each employee within the pool receives a share amount equitable to all others in the same pool who are at the same rate of basic pay and receive the same score and shares. The exact Pay Pool Payout Factor will be determined by the AFC Mod STRL organization, in accordance with paragraph 7 above.

EN22FE24.079

Where:

F = Pay Pool Payout Factor, determined by AFC STRL

Pay Pool Managers are accountable for staying within pay pool funding limits. The Pay Pool Manager makes final decisions on pay increases and/or bonuses to individuals based on rater recommendation, the final score, the pay pool funds available, and the employee's salary at the end of the rating cycle.

In addition, the designated pay pool manager may nominate employees for Extraordinary Achievement Recognition. Such recognition grants a base pay increase and/or bonus to an employee that is higher than the one generated by the compensation formula for that employee. The funds available for an Extraordinary Achievement Recognition are separately funded within the constraints of the organization's budget.

9. Base Pay Increases and Bonuses

An employee's shares will be paid out as a base pay increase, a bonus, or a combination. To continue to provide performance incentives while also ensuring cost discipline, base pay increases may be limited or capped. Certain employees will not be able to receive base pay increases due to base pay caps. Base pay is capped when an employee reaches the maximum rate of pay in an assigned pay band or when a performance-based rule applies (see paragraph 10 below). Employees affected by base pay caps and those receiving retained pay will receive the entire performance payout in the form of a bonus.

If the AFC STRL organization deems it appropriate, the Pay Pool Manager may re-allocate a portion (up to the maximum possible amount) of the unexpended base pay funds for capped employees to uncapped employees. Any dollar increase in an employee's projected base pay increase will be offset, dollar for dollar, by an accompanying reduction in the employee's projected bonus payment. Thus, the employee's total performance payout is unchanged.

PFP bonuses and salary increases must be effective within 120 days of the end of the appraisal cycle.

10. Performance-Based Rules

As a compensation management tool, AFC STRL organizations may establish performance-based rules to manage pay progression by career path, pay band, geographic location, or any other grouping. If established, such performance-based rules must be approved by the PMB and published to the workforce prior to implementation. In addition, the process for obtaining an exception to such rules must be documented in the IOP. Once established, performance-based rules may be used in the pay pool process to manage performance salary increases. Examples of performance-based rules include rules similar to a Mid-Point Rule. For example, to provide added performance incentives as an employee progresses through a pay band, a mid-point rule may be used to determine base pay increases. The mid-point rule dictates that employees must receive a score of 30 or higher for their base pay to cross the salary midpoint of their pay band. Also, once an employee's base pay exceeds the salary midpoint of their pay band, the employee must receive a score of 30 or higher to receive any

additional base pay increases. Any amount of an employee's performance payout, not paid in the form of a base pay increase because of the mid-point rule, would be paid as a bonus. This rule effectively raises the standard of performance expected of an employee once the salary midpoint of a pay band is crossed. This rule would apply to all employees in every career path and pay band.

11. Awards

To provide additional flexibility in motivating and rewarding individuals and groups, some portion of the performance award budget may be reserved for special acts and other categories as they occur. Awards may include, but are not limited to special acts, patents, suggestions, on-the-spot, and time-off. The funds available to be used for awards are separately funded within the constraints of the organization's overall award budget.

While not directly linked to the PFP system, this additional flexibility is important to encourage outstanding accomplishments and innovation in accomplishing the diverse modernization missions of the AFC STRL organizations participating in Mod Demo. Additionally, to foster and encourage teamwork among its employees, organizations may give group awards.

12. General Pay Increase (GPI)

All employees will receive a GPI, except as described below.

Employees, who are on a PIP and/or receive a Level 1 rating of record at the time pay determinations are made, may be denied performance payouts or the GPI. Such employees will not receive RIF service credit until such time as their performance improves to the satisfactory level and remains so for at least 90 days. When the employee has performed at an acceptable level for at least 90 days, the GPI will not be retroactive but will be granted at the beginning of the next pay period after the supervisor authorizes its payment.

These actions may result in a base salary that is identified in a lower pay band. This occurs because the minimum rate of basic pay in a pay band increases as the result of the GPI (5 U.S.C. 5303). This situation (a reduction in pay band with no reduction in pay) will not be considered an adverse action, nor will pay band retention provisions apply.

After 90 days of acceptable performance the employee is granted GPI and the employee will be returned to the employee's previous pay band.

13. Grievances and Disciplinary Actions

An employee may grieve the performance rating/score or shares received under the PFP system. Non-bargaining unit employees, and bargaining unit employees covered by a negotiated grievance procedure that does not permit grievances over performance ratings, must file under administrative grievance procedures when choosing to pursue a grievance. Whereas, bargaining unit employees whose negotiated grievance procedures cover performance-rating grievances must file under those negotiated procedures when choosing to pursue a grievance.

Except where specifically waived or modified in this plan, adverse action procedures under 5 CFR part 752, remain unchanged.

E. Hiring and Appointment Authorities

Competitive service positions will be filled through Merit Staffing, direct-hire authority, Delegated Examining, or other non-competitive hiring authorities. Direct-hire authority will be exercised in accordance with the requirements of the delegation of authority.

1. Qualifications

A candidate's basic qualifications will be determined using OPM's Qualification Standards Handbook for General Schedule Positions. Candidates must meet the minimum standards for entry into the pay band, unless waived by other flexibilities within the STRL. For example, if the pay band includes positions in grades GS-5 and GS-7, the candidate must meet the qualifications for positions at the GS-5 level. Specialized experience/education requirements will be determined based on whether a position to be filled is at the lower or higher end of the pay band. Selective placement factors can be established in accordance with the OPM Qualification Handbook, when judged to be critical to successful job performance. These factors will be communicated to all candidates for position vacancies and must be met for basic eligibility.

2. Delegated Examining

Under Delegated Examining when there are no more than 15 qualified applicants and no preference eligible, all eligible applicants are immediately referred to the selecting official without rating and ranking. Rating and ranking may occur when the number of qualified candidates exceeds 15 or there is a mix of preference and non-preference applicants. Category rating may be used to provide for a more streamlined and responsive hiring system to increase the number of eligible candidates referred to selecting officials. This provides for the grouping of eligible candidates into quality categories and the elimination of consideration according to the “rule of three.” This includes the coordination of recruitment and public notices, the administration of the examining process, the administration of veterans' preference, the certification of candidates, and selection and appointment consistent with merit principles.

Statutes and regulations covering veterans' preference will be observed in the selection process when rating and ranking are required. Veterans with preference will be referred ahead of non-veterans with the same score/category.

3. Direct Hire

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2024-03586. Public record. Not legal advice.