Personnel Demonstration Project; Alternative Personnel Management System for the U.S. Department of Commerce

Federal RegisterDec 24, 1997

Ask Donna

What actually matters in this document.

Text

SUMMARY: Title VI of the Civil Service Reform Act, now codified in 5

U.S.C. 4703, authorizes the Office of Personnel Management (OPM) to

conduct demonstration projects that experiment with new and different

human resources management concepts to determine whether changes in

policies and procedures result in improved Federal human resources

management. This demonstration project is designed to replicate many of

the features of the National Institute of Standards and Technology

(NIST) demonstration project created by Congress pursuant to the

National Bureau of Standards Authorization Act for Fiscal Year 1987

(Pub. L. 99-574). This project will cover units of four Department of

Commerce (DoC) organizations:

(1) Technology Administration

--Office of the Under Secretary

--Office of Technology Policy

(2) Economics and Statistics Administration

--Bureau of Economic Analysis

(3) National Telecommunications and Information Administration

--Institute for Telecommunication Sciences

(4) National Oceanic and Atmospheric Administration

--Units of the Office of Oceanic and Atmospheric Research

--Units of the National Environmental Satellite, Data, and

Information Service

--Units of the National Marine Fisheries Service

DATES: This demonstration project will be implemented on March 24,

1998.

FOR FURTHER INFORMATION CONTACT: (1) Department of Commerce: Darlene F.

Haywood, U.S. Department of Commerce, 1400 Constitution Avenue, N.W.,

Room 5004, Washington, DC 20230, 202-482-3620; (2) OPM: Judith B.

White, U.S. Office of Personnel Management, 1900 E Street, N.W., Room

7460, Washington, DC 20415, 202-606-1526.

SUPPLEMENTARY INFORMATION:

1. Background

The NIST Demonstration Project was successful and was made

permanent by Congress in 1996 (Pub. L. 104-113). Independent surveys

have demonstrated that a majority of NIST employees are satisfied with

the demonstration project. The Federal Employees Pay Comparability Act

of 1990 included many of the interventions tested successfully at NIST.

The DoC project is designed to test whether the interventions of the

NIST project can be successful in DoC environments with different

missions and different organizational hierarchies. Like the NIST

project, the DoC Demonstration Project involves simplified position

classification, pay for performance, and simplified recruiting and

examining processes.

2. Overview

A total of 67 oral and written comments were received in response

to the first Federal Register Notice of May 2, 1997. These comments

were a valuable source of input for the Department of Commerce

Demonstration Project. All comments have been considered, and changes

to the project plan have been made where deemed appropriate. Changes to

the plan involve supervisory pay, performance-based reduction-in-force

retention credit, and the extended probationary period for employees in

the Scientific and Engineering Career Path. In addition to these

changes, several sections of the plan have been clarified and expanded.

Some editorial changes and corrections were also made.

3. Summary of Comments

Nine speakers commented on the first Federal Register Notice at the

five public hearings. A total of 58 letters were received, with one

letter bearing 20 signatures. A variety of issues and concerns were

raised; however, recurring comments addressed five major topics:

(1) accountability, (2) reduction-in-force (RIF) retention credit,

(3) impact of the project on equal employment opportunity (EEO)/

Diversity, (4) pay administration, and

(5) performance appraisal. Other issues raised include

classification, employee input, project evaluation, and communication.

The following summarizes the written and oral comments by topic and

provides a response to each.

(1) Accountability

Comments. A majority (about two-thirds) of the comments from

individuals and organized groups expressed a high level of concern that

the demonstration project gives more authority and responsibility to

supervisors and managers. Believing that many supervisors do not

properly and fairly execute supervisory responsibilities or utilize the

power and tools provided under the current management system, these

employees fear a new system that gives supervisors additional authority

over their career and pay. Employees specifically questioned whether

proper controls would be in place to prevent management abuse in the

administration of the performance appraisal and classification systems.

Comments focused on the potential for favoritism and unfair treatment

of employees in the distribution of ratings and awards. Employees also

questioned whether pay pool managers would have the requisite knowledge

to make fair decisions about the work of all employees in the pay pool.

Response. The Department will implement a number of measures to

ensure management accountability. These will include: (1) employee

focus groups, (2) supervisory training, and (3) oversight.

Employee focus groups: Annual project evaluations will utilize

employee focus groups as an important source of data in measuring the

degree to which project interventions are accomplishing desired

objectives.

Training: Supervisors and managers will receive detailed training

in the new authorities they are to exercise. Classification training

will emphasize the underlying principles of project classification and

will instruct supervisors on the application of these principles to

classification decisions. Training on the performance appraisal system

will cover performance planning, monitoring, feedback, and appraisal.

In addition, supervisors will receive training on the automated

performance pay increase system and will be required to conduct a

simulation of the performance evaluation and rewards system prior to

the actual end-of-year performance appraisal. The training will also

cover the pay pool manager's responsibilities for reviewing and

reconciling ratings and ensuring equity and consistency in performance

plans and ratings.

Oversight: The authorities delegated to supervisors under this

demonstration project will be subject to three levels of oversight. The

Office of Personnel Management will oversee the project under the

authority of 5 U.S.C. 4703. The DoC Departmental Personnel Management

Board (DPMB) will manage and oversee authority delegated to the

Operating Personnel Management Boards (OPMBs) in participating

[[Page 67435]]

organizations, and OPMBs will monitor authorities delegated to

supervisors, withdrawing them when warranted.

(a) Classification: Under authority delegated by the OPMBs,

servicing human resources management staff will monitor and review

classification decisions made by managers to ensure consistent and

uniform application of classification policies and guidelines. When

classification actions are found to be inconsistent with established

policies, the servicing human resources management specialist will

attempt to resolve the inconsistency with the responsible supervisor.

If agreement cannot be reached, the issue will be referred to a

Classification Review Panel (CRP). The CRP is an ad hoc advisory panel

established by authority of the OPMB to review proposed classification

actions referred to it by the servicing Human Resources Manager.

(b) Performance Evaluation: OPMBs will oversee the operating unit

annual performance appraisal process, from development of plans to

individual pay increases and bonuses. OPMBs will also establish

operating unit guidelines on performance elements.

(2) Reduction-in-Force (RIF) Retention Credit

About half of all comments received addressed two related concerns

with respect to RIF retention credit: loss of current performance-based

credit and the percentage of employees eligible for credit under the

project.

(a) Loss of current credit

Comments. Employees thought it unfair that conversion to the

demonstration project would result in the loss of performance-based RIF

credit acquired under the current system.

Response. The demonstration project will introduce a new ``pay-for-

performance'' personnel system, and it is intended that all employees

enter the system on an equal basis, i.e, on a ``level playing field.''

Allowing some employees to bring forward performance-based RIF credit

gained under the current system would give those employees an unfair

advantage.

(b) Percentage of Employees Eligible for Credit

Comments. A number of employees objected to the provision that

would award performance-based credit for only those employees who rank

in the top ten percent of their career paths.

Response. The objective of this feature is to reward performance

that is truly outstanding. Consequently, the group of employees

receiving this credit must, by definition, be limited. However, in

order to more closely parallel agency historical experience, the

project plan has been revised to grant performance-based RIF retention

credit to employees who rank in the top 20 percent of their career path

within a pay pool, rather than the top 10 percent.

(3) Impact of the Project on EEO and Diversity

Comments. Several employees expressed concern that the

demonstration project would not support existing EEO and Diversity

goals. Specific questions were raised about the impact of the project

on the hiring of women and minorities and whether these groups would

receive an equitable share of promotions, pay increases, and bonuses.

Response. EEO and Diversity goals of the Department will not change

under the demonstration project. On an annual basis, the Department

will continue to submit an annual report and update of affirmative

employment to the Equal Employment Opportunity Commission. In addition,

Diversity Plans and Diversity Councils now in place will continue to be

required for organizations participating in the demonstration project.

Also, Senior Executive Service managers will continue to be rated on a

Diversity critical element. The Project Evaluation Model will include

criteria that will track hiring, award, promotion, and retention data

in order to closely monitor the impact of the project on workforce

diversity. A variety of data sources will be used. These include

records in servicing human resources management offices (including

records of recruitment sources) and records of EEO complaints.

(4) Pay Administration

Two major compensation issues were raised. Several employees

objected to the manner in which they would be compensated for time

credited toward their next within-grade increase. In addition, some

employees questioned the appropriateness of the supervisory pay

differential.

(a) Within-Grade Increase (WIGI) Payout

Comments. Employees objected to the one-time lump sum payment for

time credited toward the next within-grade increase on the grounds that

it would result in a negative impact on their salary and retirement

contributions and earnings. In lieu of the lump sum, some suggested

that the WIGI payout be processed as a base pay increase. Others felt

that they should be given a choice between a one-time payment and a

permanent salary increase.

Response. Organizations participating in the demonstration project

will be required to maintain compensation costs at the levels they

would have reached under the current system. A decision to grant

permanent salary increases for time credited toward within-grade

increases would result in immediate cost escalation prior to

implementation that would distort base cost calculations. Such a

decision would be counter to Departmental cost containment goals.

Moreover, under the demonstration project, the salaries of good

performers will soon overtake salaries they would have reached with

WIGIs through the following provisions of the project plan:

(1) Annual Performance Pay Increases: The new pay system provides

an opportunity for a performance pay increase each year, regardless of

an employee's position in the band. This is in contrast to the waiting

periods of one to three years for a WIGI in the General Schedule (GS)

system. The potential size of a performance pay increase in the new

system is significantly higher than the size of a GS within-grade

increase.

(2) Removal of Grade Barriers: Broad banding removes the pay

barriers between the GS grades that are placed in the same band. For

example, because grades GS-7 and GS-8 will be placed in the same band

in the Support Career Path, employees who previously reached the top of

the GS-7 grade will now have access to the GS-8 pay range.

(3) Potential for Higher Pay Increases Upon Promotion: When an

employee is promoted to a higher band, the employee's salary may be set

at any point in the range of the higher band as long as the new salary

represents an increase of at least 6 percent.

(4) Supervisory Performance Pay: Through pay for performance,

supervisors have salary potential 6 percent higher than the normal

ceiling of a band.

(b) Supervisory Performance Pay

Comments. Several employees questioned the appropriateness of the

immediate salary increase that supervisors would receive under the

demonstration project. Some stated that supervisors would receive

additional compensation because they would convert to a higher pay band

on the basis of their supervisory duties, and therefore, an automatic

pay increase would result in double compensation for supervision. Some

asserted that this policy conflicts with the basic ``pay-for-

performance'' concept and suggested that any pay incentive awarded

supervisors should be given after the

[[Page 67436]]

first performance appraisal cycle, if earned through performance.

Response. The proposed project plan provided for an automatic pay

differential for supervisors in the Scientific and Engineering (ZP)

Career Path only. The amount of this type of differential was to be

fixed at 3 percent or 6 percent, for first-level and second-level (and

higher) supervisors, respectively. However, as a result of comments

received, this feature of the system has been eliminated. ZP

supervisors will not be given an immediate salary increase upon

conversion to the demonstration project. Supervisors in all career

paths will be eligible for salaries up to 6 percent higher than the

maximum rates of their pay bands, and there will be no differentiation

in the amount of the increase based on supervisory level. Any employee

who meets the demonstration project definition of ``supervisor'' will

be eligible for the 6 percent increase, which may be reached through

performance pay increases granted through the regular performance

appraisal process (see Section III(D)(4) Supervisory Performance Pay).

1. (5) Performance Appraisal

About half of all comments received addressed the performance

appraisal process. Issues raised focused on three major areas: ranking

versus teamwork, linking the annual comparability increase to

performance, and the requirement for all performance elements to be

critical.

(a) Impact of Ranking on Teamwork

Comments. Several employees commented that ranking employees by

performance score will pit employees against each other, create a

competitive work environment, and destroy teamwork.

Response. Under the demonstration project, employees will be rated

against the criteria in their performance plans and ranked accordingly.

There will be no direct comparison of employees' performance. It is

expected that more competitive salaries that are directly tied to

performance will improve both individual and organizational

performance. Furthermore, the demonstration project performance

appraisal system is flexible enough to reward those aspects of work

that require cooperation and teamwork. For example, in units requiring

high levels of cooperation and teamwork to accomplish organizational

goals, supervisors may include contributions to the team's

accomplishments in performance plans and rate employees accordingly.

(b) Linking the Annual Comparability Increase to Performance

Comments. Several employees expressed concern about the proposal to

allow only those employees with a current annual performance rating of

Eligible to receive the annual general comparability increase. They

consider the annual increase a cost-of-living increase, which should

not be tied to performance.

Response. The annual General Schedule (GS) pay adjustment is

authorized under 5 U.S.C. 5303. It is based on the cost of labor, not

the cost of living. GS pay adjustments are linked to changes in the

Employment Cost Index (ECI), which measures the overall rate of change

in employers' compensation costs in the private and public sector,

excluding the Federal Government. The demonstration project is based on

the principle of pay for performance; therefore, all pay increases,

including the annual comparability increase, are tied to performance.

Comments. Some employees expressed concern about the requirement

for all elements in a performance plan to be critical elements. In

their opinion, this will make it easier for supervisors to withhold pay

increases or bonuses, or even initiate removal, when one element is

rated Unsatisfactory.

Response. The requirement for all elements in a performance plan to

be critical is not a departure from the current performance appraisal

system. The demonstration project will not require that noncritical

elements used in the current system be changed to critical elements

under the project. The project simply eliminates noncritical elements.

Also, while noncritical elements may now be included in an employee's

performance plan, they have very little weight. Under the current

system, unacceptable performance in one critical element results in a

mandatory rating of Unacceptable. Likewise, under the demonstration

project, unsuccessful performance on one element will result in a

rating of Unsatisfactory.

(6) Other Comments

Employees addressed a number of other issues including

classification, employee input to the project, project evaluation, and

communication.

(a) Classification

Comments. One employee expressed concern that problems with the

current GS classification standards would carry over into the

demonstration project. Some questioned the basis for grouping

occupations into four career paths, and a few employees questioned the

career path decisions for their occupations. Others expressed

dissatisfaction with what they consider the ``arbitrary'' structure of

the pay bands, believing that employees who convert to the top of their

bands will have minimal opportunity for pay increases.

Response. (1) Classification Standards: Under the demonstration

project, OPM classification standards will not be used. They will be

replaced with more streamlined classification standards that have been

developed to cover the work in the participating organizations. Each

pay band in a career path will have a narrative standard that uses two

factors:

(1) Duties and Responsibilities and (2) Knowledge, Skills, and

Abilities (KSAs). At each successively higher band, the standards

describe a higher level of work and a higher level of KSAs required to

successfully perform the work. These standards will simplify the

classification process, make it more understandable to managers and

employees, and reduce the time required to make classification

decisions.

(2) Career Paths: The four career paths are intended to replace the

GS method of grouping occupations. Under the current system, GS

occupations are placed in occupational groups according to general

subject matter. Each group includes both two-grade and one-grade

interval occupations, with each type receiving different treatment for

classification and other purposes. By contrast, career paths group

occupations that have parallel career patterns and can be similarly

treated for staffing, classification, pay, and other personnel

purposes.

(3) Pay Bands: Pay bands are designed to parallel the typical

career patterns for occupations in a career path. For example, in the

Scientific and Engineering (ZP) Career Path, professional technical

employees begin their careers as trainees (Band I), move through a

developmental stage that builds on professional knowledge gained

through undergraduate work (Band II), proceed to independent, full

performance research or operational work (Band III), acquire program

responsibility (Band IV), and achieve broad recognition as an authority

in the field (Band V).

(4) Potential for Pay Increases: Within each pay band, the maximum

potential for a performance pay increase is highest for employees in

interval one and lowest for employees in interval

[[Page 67437]]

three. This arrangement is intended to slow salary increases as

employees move through a band, duplicating the effect of the longer

waiting periods for GS within-grade increases as GS employees move

through the steps of a grade.

Comments. Some employees questioned whether their occupations were

assigned to the appropriate career paths.

Response. The four career paths used in the Department of Commerce

Demonstration Project as well as placement of occupations in those

paths replicate the NIST system. Career path determinations for

occupations not covered by the NIST project are based on the

definitions of career paths. However, after the first year of

operation, questions concerning changes in career path may be

considered.

(b) Employee Input

Comment. A few employees felt that the project plan had not

received any input from employees and that this could adversely impact

relationships between management and employees.

Response. Numerous briefings were provided to employees and union

representatives prior to the public hearings. Employees were given an

opportunity to provide oral comments at five public hearings held

between June 9 and June 26, 1997. These hearings were held in locations

across the country that were accessible to most employees. In addition,

the first Federal Register Notice, published on May 2, 1997, informed

employees that written comments would be accepted through July 10,

1997. As a result of comments received from employees during the public

comment period, several changes have been made to the project plan.

Comments. Several employees commented on the design of the Project

Evaluation Model. Specifically, it was suggested that employee morale

be measured since a direct link exists between morale and

organizational performance, that employee opinions be one of the data

sources for evaluation of the project, and that EEO complaints and

grievance patterns be incorporated into the evaluations.

Response. The Project Evaluation Model will include employee

surveys as a source of data. The surveys will include criteria to

measure organizational climate and general concerns. In addition, as

part of the evaluation process, data on EEO complaints and grievances

will be monitored.

(d) Communication

Comment. One employee commented that the level of communication to

employees about the project had been inadequate.

Response. All employees were invited to attend general briefings on

the proposed demonstration project in March, April, and early May of

this year. At these briefings, employees received handouts describing

the key features of the project. The publication of the first Federal

employees during the week of May 5, 1997. In that announcement,

employees were informed that the Federal Register Notice was

immediately available on the Office of Personnel Management Internet

Home Page. Shortly thereafter, the publication of the Federal Register

Notice was announced on the Department of Commerce Internet Home Page,

and numerous copies were distributed to all servicing human resources

offices for dissemination to employees. An article on the demonstration

project appeared in the May/June 1997 issue of the Department's

Commerce People magazine. In addition, a video which provides an

overview of the project was developed and made available to employees,

and several follow-up briefings were conducted. To ensure that

employees are kept informed on the project, the Department will issue a

Demonstration Project Newsletter periodically.

4. Demonstration Project System Changes

The following directs readers to the substantive changes and

clarifications to the project plan. The page numbers below refer to the

pages of the proposed plan, published in the Federal Register on May 2,

1997.

(1) Page 24256, 24258, and 24260: The Office of the Chief Financial

Officer/Assistant Secretary for Administration and the Office of the

General Counsel have been deleted, as those organizations will not

participate in the project.

(2) Page 24259: Two laboratories of the Office of Oceanic and

Atmospheric Research (OAR) that were inadvertently listed have been

deleted since they will not participate in the demonstration project.

These are the Geophysical Fluid Dynamics Laboratory, in Princeton, New

Jersey, and the Pacific Marine Environmental Laboratory, in Seattle,

Washington. In addition, all of the locations for each of the

participating laboratories have been listed.

(3) Page 24262: Table 3 has been changed to correct an error

introduced by the printing process. Specifically the table has been

corrected to show no GS-15 positions in the GS-1340 Meteorology Series

and a total of 235 positions in this occupation.

(4) Page 24262: Mountain Administrative Support Center (MASC) has

been deleted from Table 4, since MASC will not participate in the

demonstration project.

(5) Page 24263: The definitions of the four career paths have been

expanded for clarification.

(6) Page 24265: Paragraph B2(a) has been revised to restrict direct

examination and the associated requirement for Applicant Supply Files

to occupations for which there is documented evidence that skills are

in short supply.

(7) The requirement for all employees in the Scientific and

Engineering (ZP) Career Path to serve a three-year probationary period

has been modified. The three-year probationary period will be

applicable to only those ZP employees who are assigned to research and

development positions as identified by the functional code assigned in

conjunction with the classification process. All other ZP employees

will serve a one-year probationary period. (For further explanation,

see Section III(B)(10) Probationary Period.)

(8) Page 24266: The provisions for awarding performance-based RIF

retention credit have been changed. An employee with an overall

performance score in the top 20 percent (as opposed to the top 10

percent) of scores within a career path in a pay pool will be credited

with 10 additional years of service for retention purposes.

(9) Page 24267: The demonstration project definition of

``supervisor'' has been clarified and expanded. Minimum criteria for

classification of a position as ``supervisory'' have been included.

(10) Page 24267: The section ``Locality Pay'' has been clarified.

Specifically, the sentence dealing with special rates and locality

rates has been rewritten to indicate that for bands affected by special

rates, the maximum rate will be the higher of the special rate or the

locality rate, rather than the special rate and the locality rate.

(11) Page 24267: The policy on supervisory pay has been revised.

Supervisors in the Scientific and Engineering (ZP) Career Path will not

be eligible for immediate salary increases upon conversion to the

demonstration project. Supervisors in all career paths will be eligible

for salaries up to 6 percent higher than the maximum rates of their pay

bands, and there will be no differentiation in the amount of the

increase based on supervisory level.

[[Page 67438]]

Any employee who meets the demonstration project definition of

``supervisor'' will be eligible for the maximum increase of 6 percent,

which may be reached through performance pay increases granted through

the regular performance appraisal process.

(12) Page 24268: In the section entitled ``Pay Setting Upon

Movement of an Employee to a Different Pay Area,'' the formula for

determining the pay rate in the new area was printed incorrectly and

has been corrected.

(13) Page 24274: The Project Evaluation Model has been revised to

include the objective of ``Support for EEO and Diversity goals.''

(14) Page 24276: In the ``Project Management'' section, the role of

the DoC Acting Chief Financial Officer/Assistant Secretary for

Administration (now the Director of the National Institute of Standards

and Technology) as chairman has been clarified to show that the role is

specific to the individual, who will serve as Chair of the DPMB through

the first cycle of the project's operation. After the first cycle,

chairmanship of the Board will be assumed by one of the members of the

Board.

Janice R. Lachance,

Director.

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

F. Labor Participation

G. Project Design/Methodology

III. Personnel System Changes

A. Position Classification

B. Staffing

C. Reduction-in-Force

D. Pay Administration

E. Performance Evaluation and Rewards

IV. Conversion or Movement from a Project Position to a General

Schedule Position

A. Grade-Setting Provisions

B. Pay-Setting Provisions

V. Budget Discipline

A. Reprogramming Costs

B. Base Cost Assessment

C. Funding Pools for Performance Pay Increases and Bonuses

D. Budget Monitoring

VI. Project Evaluation

VII. Project Management

VIII. Training

A. Manager and Supervisor Training

B. Employee Training

C. Support Staff Training

IX. Experimentation and Revision

X. Authorities and Waiver of Laws and Regulations Required

I. Executive Summary

This project was designed by the Department of Commerce with

participation and review by the Office of Personnel Management (OPM).

The demonstration project will pursue several key objectives of the

National Performance Review: to simplify the current classification

system for greater flexibility in classifying work and paying

employees; to establish a performance management and rewards system for

improving individual and organizational performance; and to improve

recruiting and examining to attract highly qualified candidates and get

new hires aboard faster. The duration of the project will be 5 years,

except that the project may be extended by OPM if further testing and

evaluation are warranted.

The proposed project will test whether the interventions of the

NIST project can be successful in other environments. Other reasons for

testing the NIST interventions in the Department are: (1) all of the

diverse operating units in the proposed coverage are within the same

Department, the U.S. Department of Commerce, which is also the parent

agency of NIST; (2) several of the operating units in the proposed

coverage have served for eight years as comparison sites for the NIST

project; and (3) during the implementation and operation of the NIST

project, DoC and NIST staff worked closely with the U.S. Department of

Agriculture's National Finance Center, which provides personnel and

payroll computing and database services to all of DoC, including NIST

and the units proposed for the new project.

II. Introduction

A. Purpose

The purpose of the proposed project is to strengthen the

contribution of human resources management in helping to achieve the

missions of specific operating units of the Department of Commerce. The

project conducted by NIST successfully demonstrated that certain

innovative changes could improve human resources management in the NIST

environment. The proposed project will test whether these same

innovations will produce similarly successful results in other DoC

environments.

B. Problems With the Present System

The Department of Commerce encourages, serves, and promotes the

Nation's international trade, economic growth, and technological

advancement. Within this framework, and in the interest of promoting

the national interest through the encouragement of the competitive free

enterprise system, the Department provides a wide variety of programs,

some of which are included in the proposed coverage of the project.

The current system has three major impediments to a manager's

ability to effectively manage human resources and shape the workforce:

(1) Hiring restrictions, (2) an overly complex job classification

system, and (3) poor tools for rewarding and motivating employees.

These impediments, embedded in a system that does not assist managers

in removing poor performers, build stagnation in the workforce and

waste valuable time.

C. Changes Required/Expected Benefits

The innovations of the project and their objectives are:

1. Classification

Career paths will replace occupational groups, broad bands will

replace grades, and Departmental broad-band standards will replace OPM

classification standards. The classification system will be automated

and classification authority will be delegated to line managers.

These changes are intended to simplify and speed up the

classification process, make the process more serviceable and

understandable, improve the effectiveness of classification decision-

making and accountability, and facilitate pay for performance. Broad

bands provide larger classification targets that can be defined by

shorter, simpler, and more understandable classification standards.

This simpler system will be easier to automate, will require fewer

resources to operate, and will facilitate delegation to line managers.

By providing broader and more flexible pay ranges for setting entry

pay, broad banding will provide hiring officials with an important tool

for attracting high-quality candidates and thus contribute to the

objective of increasing the quality of new hires.

By providing more flexible pay setting based on performance, broad

banding will give managers the ability to increase the pay of good

performers to higher and more competitive levels, thus improving the

retention of good performers. At the same time, the potential for

higher pay increases for good performance, supported by the broader pay

ranges of broad banding, will contribute to the objective of improving

organizational and individual performance.

2. Staffing

Staffing methods will include two that were implemented in the NIST

[[Page 67439]]

Demonstration Project and which are now available to all agencies

through examining authority delegated by OPM. For the sake of

simplification and to parallel the NIST Demonstration Project, they are

retained with the same titles under the Department of Commerce

Demonstration Project: Direct Examination and Agency-Based Staffing. In

addition, there will be placements under Merit Assignment and various

noncompetitive appointing authorities. OPM registers will not be used,

but positions in occupations covered by the Luevano Consent Decree

(Administrative Careers with America or successor programs) will be

filled using OPM guidance. Other supplemental staffing tools will

include such elements as paid advertising, flexible entry salaries,

probation, local authority for recruiting and retention payments, and

more flexible pay increases associated with promotion.

These changes are intended to attract high-quality candidates,

speed up the recruiting and examining process, increase the

effectiveness of the probationary review process, and increase the

retention of good performers.

Agency-based staffing, supported by paid advertising, will allow

hiring officials to focus on more relevant recruiting sources. Direct

examination will allow managers to hire individuals with shortage

skills as they find them, get them on board faster, and avoid the loss

of good candidates who may grow impatient with a long hiring process,

thus contributing to the objectives of increased quality of new hires

and better fit between position requirements and candidate skills.

The three-year probationary period will help ensure that scientists

and engineers who are retained beyond probation are capable of carrying

out the full cycle of research and development (R&D) work, thus

contributing to the objectives of high-quality hires and a high-

performing workforce. (See Section III(B)(10) Probationary Period.)

Local authority for recruiting and retention payments will provide

extra incentives for hiring and retaining individuals with shortage

skills, thus contributing to the objectives of increasing the quality

of new hires, improving the fit between position requirements and

individual qualifications, and improving the retention of good

performers.

3. Pay

The most important change in pay administration is the introduction

of pay for performance, which will govern individual pay progression

within bands. Funds currently applied to within-grade increases,

quality step increases, and promotions from one grade to a higher grade

when both grades are now in the same band, will be used instead to

grant performance-based pay increases within bands. The amount of the

basic pay and locality pay increases approved by Congress and the

President, however, will continue to be applied to pay schedules and to

the salaries of employees with a performance rating of Eligible. Other

pay tools are supervisory performance pay, flexible pay setting for new

hires, and more flexible pay setting upon promotion.

Pay for performance promotes fairness through the peer ranking

process and provides a motivational tool and a retention tool. As a

motivational tool, the promise of higher pay increases for good

performance encourages high achievement. As a retention tool, pay for

performance allows the organization to quickly move the salaries of

good performers to levels that are more competitive in the labor

market.

Supervisory performance pay provides an incentive for supervisors,

addressing the objective of improved individual and organizational

performance. Supervisory performance pay also addresses the objective

of improving retention by raising the pay of high-performing

supervisors to more competitive levels.

Flexible pay setting for new hires is a recruiting tool that gives

hiring officials greater flexibility to offer more competitive salaries

to high-quality candidates, addressing the objective of improving the

quality of new hires. The greater flexibility in setting pay upon

promotion gives managers another retention tool to help retain top

performers.

4. Performance Appraisal

The new system replaces the current five-level rating system with a

two-level rating system, using Unsatisfactory and Eligible labels.

(Unsatisfactory is equivalent to Unacceptable, as used in Part 430 of

Title 5, Code of Federal Regulations.) The most important feature of

the proposed performance appraisal system is that it is based on the

application of a weighted 100-point scoring system linked to pay for

performance. As in the current system, each employee has an individual

performance plan composed of several performance elements (all of which

are critical elements) that are measured with the 100-point scoring

system in conjunction with the application of benchmark performance

standards. Based on the resulting total scores, supervisors rank

employees by performance within peer groups and grant performance pay

increases according to the ranking. Highly ranked employees within a

peer group receive relatively high pay increases and lower ranked

employees receive relatively lower pay increases. Bonuses are granted

at the discretion of the supervisor following the performance appraisal

process.

The performance appraisal process is intended to (1) promote good

performance; (2) encourage a continuing dialogue between supervisors

and employees on organizational objectives, supervisory expectations,

employee performance, employee needs for assistance and guidance, and

employee development; and (3) provide a basis for performance-related

decisions in employee development, pay, rewards, assignment, promotion,

and retention. The system will more effectively communicate to

employees how they are performing in relation to their peers, the

rewards of good performance, and the consequences of poor performance.

Performance-based pay increases give an operating unit the ability

to raise the pay of good performers more rapidly, thus improving

retention of good performers. The potential for higher pay increases

for good performance will encourage achievement and promote the

objective of improved individual and organizational performance.

5. Performance Bonuses

In accordance with 5 CFR 451, at the end of the annual performance

period, Rating Officials, with the approval of Pay Pool Managers, will

have the opportunity to reward employee performance with bonuses up to

$10,000. Bonuses address two objectives. First, rewarding achievement

will make high achievers more likely to remain, thus improving

retention of the best performers. Second, the potential for bonuses for

achievement will encourage improved individual performance.

6. More Efficient Systems

The Department will improve the efficiency of human resource

systems by streamlining procedures, reducing paperwork, and automating

processes wherever possible.

7. Line Management Authority

Under the demonstration project, greater authority and

accountability will be delegated to line managers. This delegation is

intended to improve the effectiveness of human resources management by

strengthening the role of line managers as the human resources managers

of their units. The project will

[[Page 67440]]

be managed by the Departmental Personnel Management Board (DPMB).

Through the first cycle, the Board will be chaired by the Director of

the National Institute of Standards and Technology. Following that, one

of the Board members will assume the role of Chairman. Each major

operating unit will have its own Operating Personnel Management Board

(OPMB) to manage and oversee local operations. (See the section on

Project Management.)

D. Participating Organizations

The Department of Commerce encourages, serves, and promotes the

Nation's international trade, economic growth, and technological

advancement. Within this framework, and in the interest of promoting

the national interest through the encouragement of the competitive free

enterprise system, the Department provides a wide variety of programs,

some of which are included in the proposed coverage. The following

organizations will participate in the project:

Technology Administration (TA)

The Technology Administration, which oversees NIST and the National

Technical Information Service (NTIS), was established by Congress in

1988 as the premier technology agency working with U.S. industry in

improving competitiveness and increasing the impact of technology on

economic growth. The TA coverage would include only the Office of the

Under Secretary for Technology Administration and the Office of

Technology Policy. This coverage would be an opportunity to apply broad

banding principles to a policy, planning, and development environment

dealing with issues vital to the future of the U.S. economy as it is

affected by technology. TA offices in the proposed coverage are located

at the DoC headquarters building in Washington, D.C.

The key occupations are: General Administration, Management

Analyst, and General Business Specialist.

Bureau of Economic Analysis (BEA), Economics and Statistics

Administration

BEA is responsible for providing a current picture of the U.S.

economy through the preparation, development, and interpretation of the

national income and product accounts showing the gross domestic

product, business and other components of the national wealth accounts,

industrial market interrelationships traced by the input-output

accounts, and other accounts showing such economic indicators as

personal income, foreign investment, and balance of payments. The

bureau also develops surveys and other tools for analyzing and

forecasting economic developments. This coverage provides a test of the

NIST system in an environment that uses economists and accountants as

analysts, reporters, and forecasters. BEA is located at 1441 L Street,

N.W., Washington, D.C.

The economic analysis work of the organization is reflected in the

following key occupations: Economist, Accountant, Financial

Administrator, Computer Specialist, Statistician, and Statistical

Assistant.

Institute for Telecommunication Sciences (ITS), National

Telecommunications and Information Administration

ITS is a major component of the National Telecommunications and

Information Administration (NTIA). ITS is the principal Federal

telecommunications research and engineering laboratory. The Institute

conducts telecommunications research in support of NTIA's

responsibilities in advising the President on telecommunications and

information policy; developing U.S. plans and policies in international

forums; and developing policy for Federal use of the radio frequency

spectrum. This application will test how well the NIST interventions

work in a research and development (R&D) environment quite different

from the NIST environment. ITS is located in Boulder, Colorado.

The ITS R&D work is carried out primarily by Electronics Engineers,

with help from Mathematicians.

The remaining units are subunits of the National Oceanic and

Atmospheric Administration (NOAA):

Office of Oceanic and Atmospheric Research (OAR)

OAR is the primary research and development unit of NOAA. OAR

provides the science and technology to support improvements in NOAA

services and address current and future problems. OAR conducts research

programs in coastal, marine, atmospheric, and space sciences through

its own laboratories and offices, as well as through networks of

university-based programs. The work consists of research, modeling, and

environmental observations relating to weather, climate, and

environmental resources. The laboratory component of OAR is the

Environmental Research Laboratories (ERL). ERL includes research

laboratories in space environment, aeronomy, environmental technology,

weather forecast systems, climate monitoring and diagnostics, severe

storms, air resources, oceanography, and geophysical fluid dynamics.

This diversity provides a rich new R&D environment for the testing of

broad banding principles. OAR and ERL headquarters are located in

Silver Spring, Maryland. All ERL laboratories will be included in the

project, except the Great Lakes Environmental Research Laboratory (Ann

Arbor, MI), the Geophysical Fluid Dynamics Laboratory (Princeton, NJ),

and the Pacific Marine Environmental Laboratory (Seattle, WA). The

project laboratories are:

Aeronomy Laboratory--Boulder, CO

Atlantic Oceanographic and Meteorology Laboratory--Miami, FL; Silver

Spring, MD; San Diego, CA; Norfolk, VA; and Seattle, WA.

Air Resources Laboratory--Silver Spring, MD; Boulder, CO; Research

Triangle Park, NC; Oak Ridge, TN; Las Vegas, NV; and Idaho Falls, ID

Climate Diagnostic Center--Boulder, CO

Climate Monitoring and Diagnostics Laboratory--Boulder, CO; Hilo, HI;

Barrow, AK; Pago Pago, American Samoa; South Pole, Antarctica

Environmental Technology Laboratory--Boulder, CO Forecast Systems

Laboratory--Boulder, CO National Severe Storms Laboratory--Norman, OK

Space Environmental Laboratory--Boulder, CO

The dominant occupation within OAR is Meteorologist. Other key

occupations are Physical Scientist, Physicist, Electronics Engineer,

Computer Specialist, Electronics Technician, Physical Science

Technician, and Mathematician.

National Environmental Satellite, Data, and Information Service

(NESDIS)

NESDIS operates NOAA's satellites and ground facilities; collects,

processes, and distributes remotely sensed data; conducts studies,

plans new systems, and carries out the engineering required to develop

and implement new or modified satellite systems; carries out research

and development on satellite products and services; provides ocean data

management and services to researchers and other users; and acquires,

stores, and disseminates worldwide data related to solid earth

geophysics, solar-terrestrial physics, and marine geology and

geophysics. NESDIS provides both a technical operations environment and

a new R&D environment for testing the NIST interventions. NESDIS

headquarters and most of its offices are located in Suitland, Maryland.

Ground stations are located at Wallops Island, Virginia, and Fairbanks,

Alaska. The National Climatic Data Center is located

[[Page 67441]]

in Asheville, North Carolina. All of NESDIS will be included in the

project, except for the Wallops Island ground station.

The key occupations within NESDIS are Physical Scientist,

Meteorologist, Computer Specialist, Oceanographer, Physical Science

Technician, Meteorological Technician, Electronics Engineer,

Engineering Technician, Geophysicist, and Mathematician.

National Marine Fisheries Service (NMFS)

The mission of the National Marine Fisheries Service is the

stewardship of living marine resources for the benefit of the Nation

through their science-based conservation and management and promotion

of the health of their environment. NMFS supports domestic and

international conservation and management of living marine resources.

The goals of NMFS are to rebuild and maintain sustainable fisheries, to

promote the recovery of protected species, and to protect and maintain

the health of coastal marine habitats. NMFS brings in a variety of work

in the biological sciences never before addressed by broad banding

principles.

In addition to the headquarters office in Silver Spring, Maryland,

there are five regions, each of which consists of a Regional Office and

a Fisheries Science Center. The regional offices are located in the

following areas: Northeast (Gloucester, Massachusetts); Southeast (St.

Petersburg, Florida); Northwest (Seattle, Washington); Southwest (Long

Beach, California); and Alaska (Juneau). All the above units of NMFS

will be included in the project except for the following: in

Headquarters, the Office of Enforcement and the Inspection Services

Division; and in the regions, the Fisheries Science Centers located in

Woods Hole, Massachusetts; Miami, Florida; Seattle, Washington; La

Jolla, California; and the Alaska Center located in Seattle,

Washington.

NMFS is supported mainly by occupations in the biological sciences:

Fish Biologist, Biologist, Microbiologist, and Biology Technician.

Other important occupations are Chemist, Oceanographer, Wildlife

Biologist, Computer Specialist, and General Business Specialist.

E. Participating Employees

The project covers all positions that would otherwise be in the

General Schedule (GS) system. Wage Grade positions are not included.

Table 1 shows the total number of employees in each operating unit

to be covered by the project. Table 2 lists the occupational series in

which current positions are classified and shows the number of

employees in each series. The OPM occupational series will be retained.

The series are listed under the career path in which they will be

placed. (See Position Classification for definitions of the four career

paths.) Table 3 shows the number of covered employees in each series,

by General Schedule grade.

Table 1.--Number of Covered Employees by Unit

------------------------------------------------------------------------

Operating unit Number

------------------------------------------------------------------------

TA............................................ ........... 35

BEA, ESA...................................... ........... 414

ITS, NTIA..................................... ........... 82

NOAA.......................................... ........... 2114

OAR....................................... (640)

NESDIS.................................... (736)

NMFS...................................... (738)

-------------------------

Total................................. ........... 2645

------------------------------------------------------------------------

Table 2.--Occupational Series, by Career Path

------------------------------------------------------------------------

Series Title Number

------------------------------------------------------------------------

Scientific and Engineering (ZP) Career Path

------------------------------------------------------------------------

101............................. Social Scientist......... 2

110............................. Economist................ 247

184............................. Sociologist *............ 1

190............................. Anthropologist *......... 1

334............................. Computer Specialist...... 267

401............................. Biologist................ 51

403............................. Microbiologist........... 4

408............................. Ecologist *.............. 4

480............................. Fish Administrator *..... 43

482............................. Fish Biologist *......... 182

486............................. Wildlife Biologist *..... 2

499............................. Biological Science 1

Student.

701............................. Veterinary Medical 1

Officer *.

801............................. General Engineer......... 3

810............................. Civil Engineer........... 8

830............................. Mechanical Engineer...... 3

850............................. Electrical Engineer...... 1

854............................. Computer Engineer........ 2

855............................. Electronics Engineer..... 96

861............................. Aerospace Engineer *..... 1

899............................. Engineering Trainee...... 1

1301............................ Physical Scientist....... 198

1310............................ Physicist................ 71

1313............................ Geophysicist *........... 12

1315............................ Hydrologist *............ 1

[[Page 67442]]

1320............................ Chemist.................. 23

1330............................ Astronomer............... 8

1340............................ Meteorologist *.......... 226

1350............................ Geologist................ 2

1360............................ Oceanographer............ 77

1372............................ Geodesist................ 3

1382............................ Food Technologist *...... 2

1399............................ Physical Science Student. 1

1515............................ Operations Research 1

Analyst.

1520............................ Mathematician............ 24

1529............................ Mathematical Statistician 1

1530............................ Statistician............. 13

1550............................ Computer Scientist....... 7

------------

ZP.......................... Total.................... 1591

------------------------------------------------------------------------

Scientific and Engineering Technician (ZT) Career Path

------------------------------------------------------------------------

332............................. Computer Operator........ 3

392............................. Radio Frequency 2

Technician.

404............................. Biology Technician....... 9

802............................. Engineering Technician... 28

856............................. Electronics Technician... 22

1311............................ Physical Science 79

Technician.

1341............................ Meteorological Technician 41

1531............................ Statistical Clerk/ 21

Assistant *.

------------

ZT.......................... Total.................... 205

------------------------------------------------------------------------

Administrative (ZA) Career Path

------------------------------------------------------------------------

130............................. Foreign Affairs 11

Specialist *.

131............................. International Relations 7

Specialist *.

260............................. Equal Employment 4

Specialist.

301............................. Miscellaneous 77

Administration.

340............................. Program Manager.......... 2

341............................. Administrative Officer... 22

342............................. Support Services 3

Specialist *.

343............................. Management Analyst....... 76

346............................. Logistics Management 2

Specialist *.

391............................. Telecommunications 1

Specialist.

501............................. Financial Administrator.. 10

510............................. Accountant............... 46

560............................. Budget Analyst........... 28

610............................. Nurse *.................. 1

696............................. Consumer Safety 1

Specialist *.

930............................. Appeals Officer *........ 2

1001............................ General Arts and 3

Information.

1035............................ Public Affairs Specialist 6

1082............................ Writer/Editor............ 14

1083............................ Technical Writer/Editor.. 4

1084............................ Visual Information 7

Specialist.

1101............................ General Business 72

Specialist.

1140............................ Trade Specialist......... 8

1165............................ Loan Specialist *........ 16

1410............................ Librarian................ 13

1412............................ Technical Information 5

Specialist.

1654............................ Printing Manager......... 1

1670............................ Equipment Specialist..... 1

1712............................ Training Instructor *.... 1

1750............................ Instructional Systems 1

Specialist *.

ZA.......................... Total.................... 445

Support (ZS) Career Path

------------------------------------------------------------------------

29.............................. Environmental Protection 1

Assistant *.

303............................. Miscellaneous Clerk/ 72

Assistant.

305............................. Mail and File Clerk...... 3

309............................. Correspondence Clerk/ 1

Assistant.

318............................. Secretary................ 190

322............................. Clerk-Typist............. 2

326............................. Office Automation Clerk/ 40

Assistant.

335............................. Computer Clerk/Assistant. 43

[[Page 67443]]

344............................. Management Clerk/ 5

Assistant.

399............................. Student Trainee.......... 8

525............................. Accounting Technician.... 8

561............................. Budget Clerk/Assistant... 3

963............................. Legal Instruments 9

Examiner *.

1087............................ Editorial Clerk/Assistant 1

1101............................ Trade Information/ 7

Financial Assistant *.

1105............................ Purchasing Agent......... 4

1411............................ Library Technician....... 4

2005............................ Supply Clerk/Assistant... 2

2102............................ Transportation Clerk/ 1

Assistant.

------------

ZS.......................... Total.................... 404

------------------------------------------------------------------------

* These occupations were not tested by the NIST project.

BILLING CODE 6325-01-P

[[Page 67444]]

[GRAPHIC] [TIFF OMITTED] TN24DE97.000

[[Page 67445]]

[GRAPHIC] [TIFF OMITTED] TN24DE97.001

[[Page 67446]]

[GRAPHIC] [TIFF OMITTED] TN24DE97.002

[[Page 67447]]

[GRAPHIC] [TIFF OMITTED] TN24DE97.003

BILLING CODE 6325-01-C

Senior Executive Service and ST-3104 Positions

The personnel systems for SES positions (see 5 U.S.C. 3131-3136 and

5 U.S.C. 5381-5385) will not change for the project. SES

classification, staffing, compensation, performance appraisal, awards,

and reduction-in-force will be based on standard SES methods. The

personnel systems for ST-3104 positions (see 5 U.S.C. 3104 and 5376)

will change only to the extent that ST-3104 positions are in the same

performance appraisal, awards, and reduction-in-force systems as

General Schedule positions. Classification, staffing, and compensation,

however, will not change. Neither SES nor ST-3104 employees will be

subject to the pro rata share payouts upon conversion to the

demonstration project. Pay adjustments for their positions under the

project will be carried out in accordance with existing Federal rules

pertaining to SES and ST-3104 pay adjustments.

General Schedule Positions

All General Schedule (GS and GM) positions are incorporated in the

new career path/pay band system. The within-grade increases of the

General Schedule will be replaced by the annual performance pay

increases. Except as otherwise provided in the project plan, laws and

regulations pertaining to GS employees (e.g., overtime pay and cost-of

living allowance provisions) continue in force for all project

employees in the same way as they do for GS employees.

F. Labor Participation

All unions affected by the project are local units of the American

Federation of Government Employees (AFGE). All of the AFGE

representation is within the National Oceanic and Atmospheric

Administration (NOAA). The following table shows the number of project

employees represented by each union local.

Table 4.--Bargaining Unit Coverage

----------------------------------------------------------------------------------------------------------------

Employees

Operating unit Location Union local covered

----------------------------------------------------------------------------------------------------------------

NESDIS............................. Camp Springs, MD........... AFGE 3680........................ 118

Asheville, NC.............. AFGE 146......................... 146

NMFS............................... Silver Spring, MD.......... AFGE 2703........................ 169

OAR................................ Research Triangle Park, NC. AFGE 3347........................ 39

----------------------------------------------------------------------------------------------------------------

The project operating units provided numerous briefings on the

project to employees and union representatives. Human resources

representatives traveled to the various organizational locations to

conduct three-hour information briefings. In addition, each bargaining

unit covered was invited to send a representative to Boulder, Colorado,

at management's cost to receive further information on the project and

to interact with a panel of NIST managers and employees currently in

the NIST project. The project operating units offered Impact and

Implementation Bargaining to each of these unions on the conditions and

provisions of the proposed project. All of the unions on the list have

agreed to the project.

G. Project Design/Methodology

The project methodology is to introduce into selected DoC operating

units certain innovations in human resources management, and to

evaluate over time the effects of those innovations on the ability of

the operating units to manage their human resources. The methodology

includes the following steps:

1. Selection of Innovations: After review of the innovations tested

at NIST, the Department has determined that all would have potential

benefit in other DoC units and therefore should be included in the

proposed project. These innovations, and the procedures associated with

them, are described below under Position Classification, Staffing,

Reduction-in-Force, Pay Administration, and Performance Evaluation and

Rewards.

2. Selection of Operating Units: The Department has selected

several operating units (See Participating

[[Page 67448]]

Organizations.) that will provide a useful test of whether the

innovations successfully tested at NIST will produce similarly

successful results in other environments.

3. Establishment of Goals and Objectives: The following section on

Goals and Objectives describes the overall goals of the project and the

objectives associated with each of the innovations.

4. Partnership: The Department has sought input on the proposal

from each affected local union. (See Labor Participation.) The

Department will also ensure that partnership in accordance with

Executive Order 12871 continues to be an integral part of planning and

implementation.

5. Baseline Evaluation: To provide a basis of comparison between

employee opinions of the current system and their future opinions of

the project system, each employee in the covered operating units will

be asked to complete an opinion questionnaire on the current system

prior to implementation of the project. To establish a baseline cost

analysis, each operating unit will be required to analyze its personnel

costs during fiscal years 1994, 1995, and 1996.

6. Training: The Department and the operating units will provide

training to human resources staff, managers, and employees prior to

implementation of the project and will provide additional training to

managers on the pay-for-performance system prior to the end of the

first performance cycle. (See Training.)

7. Implementation: To ensure a smooth implementation, the

Department and the operating units will emphasize top management

support; the development of detailed operating procedures prior to

implementation; thorough training of managers and human resources

office staff; step-by-step implementation planning; adequate backup

systems, particularly in automated personnel and payroll systems; and

sufficient operating resources.

8. Operation: The Department will exercise continual oversight,

under the direction of the Departmental Personnel Management Board (See

Project Management.) to ensure that project authorities and procedures

are administered correctly.

9. Evaluation: The Department will arrange for an annual evaluation

of the project under an OPM-approved evaluation plan. (See Project

Evaluation.) The evaluation will be designed to determine whether the

innovations are achieving the goals and objectives described in the

following sections and are operating within acceptable cost limits.

(See Budget Discipline.)

III. Personnel System Changes

A. Position Classification

1. Introduction

Career paths will replace occupational groups, broad bands will

replace grades, and Departmental broad-band standards will replace OPM

classification standards. The classification system will be automated,