Proposed Laboratory Personnel Management Demonstration Project; Department of the Army, U.S. Army Engineer Waterways Experiment Station, Vicksburg, Mississippi

Federal RegisterMar 13, 1997

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OFFICE OF PERSONNEL MANAGEMENT

Proposed Laboratory Personnel Management Demonstration Project;

Department of the Army, U.S. Army Engineer Waterways Experiment

Station, Vicksburg, Mississippi

AGENCY: Office of Personnel Management.

ACTION: Notice of Intent to Implement Demonstration Project.

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SUMMARY: Title V of the Civil Service Reform Act, 5 U.S.C. 4703,

authorizes the Office of Personnel Management (OPM) to conduct

demonstration projects that experiment with new and different personnel

management concepts to determine whether such changes in personnel

policy or procedures would result in improved Federal personnel

management.

Public Law 103-337, October 5, 1994, permits the Department of

Defense (DoD), with the approval of the OPM, to carry out personnel

demonstration projects generally similar to the China Lake

demonstration project at DoD Science and Technology (S&T) reinvention

laboratories. The Army is proposing demonstration projects initially to

cover five of its S&T reinvention laboratories: the Army Research

Laboratory; the Army Missile Research, Development, and Engineering

Center; the Army Aviation Research and Development Center; the Army

Medical Research and Materiel Command; and the Army Engineer Waterways

Experiment Station. This proposal is for the Army Engineer Waterways

Experiment Station (WES).

DATES: To be considered, written comments must be submitted on or

before May 20, 1997; the public hearing will be scheduled as follows:

Friday, May 2, 1997, at 10:00 a.m., in Vicksburg, Mississippi. At the

time of the hearing, interested persons or organizations may present

their written or oral comments on the proposed demonstration project.

The hearing will be informal. However, anyone wishing to testify should

contact the person listed under FOR FURTHER INFORMATION CONTACT, and

state the hearing location, so that OPM can plan the hearings and

provide sufficient time for all interested persons and organizations to

be heard. Priority will be given to those on the schedule, with others

speaking in any remaining available time. Each speaker's presentation

will be limited to ten minutes. Written comments may be mailed to

Fidelma A. Donahue, U.S. Office of Personnel Management, 1900 E Street,

NW, Room 7460, Washington, DC 20415; public hearing will be held at the

following location: U.S. Army Engineer Waterways Experiment Station,

Building 1006, 3909 Halls Ferry Road, Vicksburg, Mississippi.

FOR FURTHER INFORMATION CONTACT: (1) On proposed demonstration project:

Dr. C. H. Pennington, U.S. Army Engineer Waterways Experiment Station,

ATTN: CEWES-ZT-E, 3909 Halls Ferry Road, Vicksburg, Mississippi 39180-

6199, phone 601-634-3549; on proposed demonstration project and public

hearings: Fidelma A. Donahue, U.S. Office of Personnel Management, 1900

E Street, NW, Room 7460, Washington, DC 20415, phone 202-606-1138.

SUPPLEMENTARY INFORMATION: Since 1966, at least 19 studies of DoD

laboratories have been conducted on laboratory quality and personnel.

Almost all of these studies have recommended improvements in civilian

personnel policy, organization, and management. The proposed project

involves simplified job classifications, pay banding, a contribution-

based compensation system, streamlined hiring processes, and modified

Reduction-in-Force (RIF) procedures.

Office of Personnel Management

James B. King,

Director.

Table of Contents

I. Executive Summary

II. Introduction

A. Purpose

B. Problems with the Present System

C. Changes Required and Expected Benefits

D. Participating Organizations

E. Participating Employees

F. Project Design

III. Personnel System Changes

A. Broadbanding

B. Classification

C. Pay for Performance

D. Pay Setting Provisions

E. Hiring and Placement Authorities

F. Employee Development

G. Reduction in Pay or Removal Actions

H. Revised Reduction-In-Force (RIF) Procedures

IV. Training

A. Supervisors

B. Administrative Staff

C. Employees

V. Conversion

A. Conversion to the Demonstration Project

B. Conversion from the Demonstration Project

VI. Project Duration

VII. Evaluation Plan

VIII. Demonstration Project Costs

A. Step Buy-Ins

B. Development Costs

IX. Required Waivers to Law and Regulations

A. Waivers to Title 5, U.S. Code

B. Waivers to Title 5, Code of Federal Regulations

I. Executive Summary

The Department of the Army (DA) proposes to establish, as a

demonstration project, a Personnel Demonstration Project generally

similar to the system currently in use at the Navy Personnel

Demonstration Project known as ``China Lake.'' The Personnel

Demonstration Project will be implemented initially at five Army

Science and Technology (S&T) Reinvention Laboratory sites, and will be

developed to be in-house budget neutral, based on a baseline of

September 1995 in-house costs and consistent with the DA plan to

downsize the DA laboratories and research and development (R&D)

centers. An in-house budget is a compilation of costs of the many

diverse components required to fund the day-to-day operations of a

laboratory. These components generally include pay of people (labor,

benefits, overtime, awards), training, travel, supplies, non-capital

equipment, and other costs depending on the specific function of the

activity.

This project was designed by the Assistant Secretary of the Army

for Research, Development and Acquisition with the support of the

Assistant Secretary of the Army for Civil Works, and the participation

of five Army S&T Reinvention Laboratories. Review was provided by the

US Army Corps of Engineers, DA, DoD, and OPM. Phases of the project

that address non-Title 5 issues began as early as 1 October 1995, with

implementation of Title 5 initiatives beginning no earlier than Spring

1997.

The project is built upon the concepts of linking performance to

pay for all covered positions, simplifying paperwork in the processing

of classification and other personnel actions, emphasizing partnerships

among management, employees, and unions, and delegating classification

and other authorities to line managers.

II. Introduction

A. Purpose

The quality of DoD laboratories, their people, and products has

been under intense scrutiny in recent years. This perceived

deterioration of quality is due, in substantial part, to the erosion of

control which line managers have over their human resources. This

demonstration, in its entirety, attempts to provide managers, at the

lowest practical level, the authority, control, and flexibility needed

to achieve quality laboratories and quality products. The purposes of

the demonstration project are to: improve the hiring process and

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allow WES to compete more effectively for high-quality personnel;

motivate and retain staff, through pay for performance, sabbaticals,

and a more responsive personnel system; strengthen the manager's role

in personnel management through increased delegation of personnel

authorities; increase the efficiency of the personnel system by

simplifying the classification system through broad banding and

reduction of guidelines, steps, and paperwork; and create a model that

could be adopted by other government agencies.

This project will be under the joint sponsorship of the Assistant

Secretary of the Army for Research, Development and Acquisition and the

Assistant Secretary of the Army for Manpower and Reserve Affairs. The

MACOM Commander of the participating Army S&T Reinvention Laboratory

will execute and manage the project.

Project oversight will be achieved by an executive steering

committee made up of top-level executives, co-chaired by the Deputy

Assistant Secretary of the Army for Research and Technology and the

Deputy Assistant Secretary of the Army (Civilian Personnel Policy)/

Director, Civilian Personnel. Oversight external to the Army will be

provided by DoD and OPM.

B. Problems With the Present System

The civilian personnel system currently in use at DoD laboratories

has several major inefficiencies, which hinder management's ability to

recruit and retain the best qualified personnel. Line managers have

only limited flexibility to administer personnel resources, and

existing personnel regulations are often in conflict with line

management's ability to perform world-class research. Laboratory

managers are frustrated in their attempts to hire the best and

brightest engineers and scientists (E&S).

The classification system requires lengthy, narrative, individual

position descriptions, which have to be classified by the use of

complex and often outdated position classification standards. The

system causes delays in recruiting, reassigning, promoting, and

removing employees. Rewarding or taking a performance based action

requires inordinate paperwork and time, often discouraging managers

from pursuing critical actions. Few incentives, with limited

flexibility, exist in dealing with all levels of the workforce, and pay

is not always commensurate with performance. The current reduction-in-

force (RIF) system does not adequately recognize performance as a major

criterion in RIF situations. The RIF rules are complex, and difficult

to understand and administer. The RIF process disrupts operations, due

to displacement of employees within their competitive levels and in the

exercise of bumping and retreat rights.

C. Changes Required and Expected Benefits

This project is expected to demonstrate that a human resource

management system tailored to the mission and need of WES will result

in: increased quality in the engineering and science workforce and the

laboratory products they produce; increased timeliness of key personnel

processes; trended workforce data that reveals increased retention of

excellent contributors and separation rates of poor contributors; and

increased customer satisfaction with the laboratory and its products by

customers serviced.

This demonstration program builds on the successful features of

demonstration projects at China Lake and the National Institute of

Standards and Technology. These demonstration projects have produced

impressive statistics on job satisfaction of their employees versus

that for the federal workforce in general. This demonstration expects

similar successes. A full range of data will be collected to evaluate

the project (and is described in Section VII, Evaluation Plan).

D. Participating Organization

U.S. Army Engineer Waterways Experiment Station, 3909 Halls Ferry

Road, Vicksburg, Mississippi 39180-6199. Employees assigned to WES work

at the locations shown in Table 1.

Table 1.--Duty Locations

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Total No.

Location of

employees

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London, England.............................................. 1

Berkeley, CA................................................. 1

Fort Collins, CA............................................. 1

Washington, DC............................................... 3

Gainesville, FL.............................................. 1

Jacksonville, FL............................................. 1

Jackson, MS.................................................. 1

Natchez, MS.................................................. 1

Vicksburg, MS................................................ 1412

New Madrid, MO............................................... 1

Duck, NC..................................................... 12

Corvallis, OR................................................ 1

Calhoun Falls, SC............................................ 3

Lewisville, TX............................................... 3

North Bonneville, WA......................................... 2

Eau Galle, WI................................................ 2

Onalaska, WI................................................. 1

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E. Participating Employees

The project will cover all General Schedule (GS) employees assigned

to WES. Federal Wage System (FWS) employees, Civilian Intelligence

Personnel Management (CIPMS) employees covered by Title X, and 5 U.S.C.

3105 Scientific and Technical (ST) employees will be included for

employee development provisions only. The occupational series of

employees included in the project are identified by occupational family

in Table 2. All GS employees with appointments exceeding one year will

be covered by the provisions of this project. GS employees with

appointments limited to one year or less will be covered for pay

banding, the performance appraisal process, and salary adjustments.

Senior Executive Service (SES) employees will not be included in the

project. It is the intent of WES to expand coverage of the project to

all FWS employees 1 to 2 years following date of implementation. In the

event of expansion to FWS employees beyond the performance appraisal

provisions, full approval will be obtained from DA, DoD, and OPM.

The American Federation of Government Employees (AFGE) represents

approximately 550 GS and FWS employees at WES. The AFGE represents all

E&S Technicians except student trainees; all General Support employees

except fire protection inspectors, security guards, student trainees,

and those designated as confidential employees; and all nonsupervisory

FWS employees. AFGE Local 3310 has been involved with and participated

in the development of the project since its inception. WES will

continue to fulfill its obligation to consult or negotiate with the

AFGE, as appropriate, in accordance with 5 U.S.C. 4703 (F) and 7117.

The participation with the AFGE is within the spirit and intent of

Executive Order 12871.

F. Project Design

In August 1994, a Project Manager was appointed to lead the WES

reinvention effort. The Project Manager was assisted by a

representative of the servicing Human Resources Management (HRM)

Office. During October-November 1994, a WES concept plan was developed

to map out desired areas in which to propose changes in the personnel

system. The concept plan was then merged into a single Army plan for

the participating Army S&T Laboratories and was submitted to the DA in

December 1994.

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WES formed four teams in January 1995 to develop specific

initiatives to be undertaken in the WES demonstration project. The

teams were composed of from 7 to 14 employees each and included

representatives from management, engineers, scientists, technicians,

clerical, administrative, wage grade, human resources, and

representatives from the local union. The teams developed human

resources management initiatives which were designed to: assist in

hiring the best people to accomplish the mission; improve training and

development of the workforce; improve and simplify the position

classification process; develop a broadband system to facilitate

classification and career progression; and develop a pay for

performance system to recognize employee contributions to mission

accomplishment.

The Army's plan was reviewed concurrently by DoD and OPM in April

1996. Among their many recommendations was one for each Army lab to

submit individual project plans. The second joint review by DoD and OPM

of the lab plans was conducted in September 1996. The philosophy and

intent of WES throughout the process of project development was the

inclusion of its total workforce. As such, a pay-for-performance

broadbanding system was developed for FWS employees, in partnership

with representation from the bargaining unit, and was included as part

of the WES plan. At the joint reviews, the DoD Civilian Personnel

Management Service and OPM's Office of Classification and Office of

Compensation Policy considered the broadbanding of FWS employees as

outlined in the WES plan to be inappropriate. FWS employees were

removed from the plan for pay-for-performance purposes only. Options

for including them in a pay-for-performance system at a later date are

currently being developed by WES, DA, DoD, and OPM.

This plan and these initiatives are the result of many months of

effort by dedicated participants at WES, U.S. Army Corps of Engineers,

DA, and DoD levels.

III. Personnel System Changes

A. Broadbanding

1. Pay Bands

Each occupational family will be composed of discrete pay bands

corresponding to recognized advancement within the occupations. The pay

bands will replace grades. The pay bands will not be the same for all

occupational families. Each occupational family will be divided into

four to six pay bands, each pay band covering the same pay range now

covered by one or more grades. The minimum rate of basic pay for a band

will be the minimum rate for the lower grade in the band as shown on

the regular GS schedule. The maximum rate of basic pay for a pay band

will be the highest regular schedule GS rate possible for positions

within that occupational family and pay band. A salary overlap, similar

to the current overlap between GS grades, will be maintained.

Ordinarily an individual will be hired at the lowest salary in a

pay band. Exceptional qualifications, specific organizational

requirements, or other compelling reasons may lead to a higher entrance

salary within a pay band.

The proposed pay bands for the occupational families and how they

relate to the current GS grades are shown in Table 3. This pay band

concept has the following advantages because it: reduces the number of

classification decisions required during an employee's career;

simplifies the classification decision-making process and paperwork;

supports delegation of classification authority to line managers;

provides a broader range of performance-related pay for each pay band;

and prevents the progression of low performers through a pay band by

mere longevity, since job performance serves as the basis for

determining pay.

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A feature is pay band VI of the Engineers and Scientists

occupational family, which is an expansion of the broad banding concept

used at China Lake and NIST. This pay band is designed for Senior

Technical Managers and Senior Engineers/Scientists.

Current OPM guidelines covering the Senior Executive Service and

Scientific and Technical positions do not fully meet the needs of WES.

The SES designation is appropriate for executive level managerial

positions whose classification exceeds the GS-15 grade level. The

primary knowledges and abilities of SES positions involve supervisory

and managerial authorities. Positions classified as ST are designed for

bench research scientists and engineers. OPM guidelines state that the

duties and responsibilities of ST positions must not include any

managerial or supervisory responsibility.

WES currently has a few senior manager positions which have

characteristics of both SES and ST classifications. Most of these

positions are responsible for supervising other GS-15 positions,

including branch chief, non-supervisory researcher engineers and

scientists, and potential ST positions. The positions are classified at

the GS-15 level, and one has been recognized at the SES level. WES

management considers the primary requirement for the positions to be

knowledge of and expertise in the specific scientific and technology

areas related to the mission of the organization. The ability to

manage, while important, is considered secondary. Historically, these

positions have been filled by employees who possess primarily

scientific/engineering credentials and who are considered experts in

their field by the scientific community. While it is clear these

positions warrant classification beyond the GS-15 level, attempts to

classify the positions as SES have been difficult. Classification of

the positions at ST is also not an option because of the supervisory

responsibilities.

As preeminent engineers and scientists, STs are responsible for

specific research and development efforts that are continuing and long

range, generally requiring the efforts of a team. STs usually serve as

team leaders which means there is some responsibility for assigning

work, coordinating results and redirecting efforts. It is

administratively convenient for these research team leaders to also

participate in performance management. The restriction of including

supervisory authorities in ST jobs has forced WES to exclude any

mention of the team leader responsibilities in these position

descriptions for fear that they will be interpreted as characteristic

of SES rather than ST positions. Consequently, WES has positions that

do not conform to the strict OPM definitions of either the SES or ST.

The purpose of pay band VI is to overcome the difficulties

identified above by creating a category for two types of positions--the

Senior Technical Manager (with full supervisory authorities) and the

Senior Engineer/Scientist (less than or no supervisory authority).

Current GS-15 Senior Technical Managers and Senior Engineers/Scientists

will convert into the demonstration project at pay band V. After

conversion the Senior Technical Manager and Senior Engineers/Scientist

positions will be reviewed against established criteria to determine if

they should be reclassified to pay band VI. The proposed salary range

is the same as currently exists for ST positions (minimum of 120

percent

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of the minimum rate of basic pay of GS-15 with a maximum of the basic

rate of pay established for level IV of the Executive Schedule). Vacant

positions in pay band VI will be competitively filled to ensure that

selections are made from among the world's preeminent researchers and

technical leaders in the specialty fields.

The final component of pay band VI is the management of all pay

band VI assets. Specifically, this includes authority to classify,

create, abolish positions as circumstances warrant; recruit and

reassign employees in this pay band; set pay and to have their

performance appraised under this project's pay-for-performance system.

This authority will be executed within parameters to be established at

the DA level, to include controls on the numbers of pay band VI

positions and recruitment/promotion criteria. The specific details

regarding the control and management of pay band VI assets will be

included in the demonstration's operating procedures. The laboratory

wants to demonstrate increased effectiveness by gaining greater

managerial control and authority, consistent with merit, affirmative

action, and equal employment opportunity principles.

2. Occupational Families

Positions will be grouped into occupational families according to

similarities in type of work and customary requirements for formal

training or credentials. The historical patterns of advancement within

the occupational families will be considered. The current positions and

grades at WES have been examined, and their characteristics and

distribution have served as guidelines in the development of

occupational families. Four occupational families will be established:

(a) Engineers and Scientists. This occupational family includes all

technical professional positions such as engineers (civil, hydraulic,

structural, mechanical, electronic, electrical, chemical, and

environmental), mathematicians, statisticians, computer scientists,

outdoor recreational planners, geographers, architects, archaeologists,

operations research analysts, and a variety of physical and biological

scientists. Specific course work or educational degrees are required

for positions in this occupational family.

(b) E&S Technicians. This occupational family consists of the

positions that support the various engineering and scientific

activities. Employees in this occupational family are required to have

training and skills in the various technical areas (civil, hydraulic,

structural, geotechnical, physical, coastal, biological, chemical).

functions in such fields as counsel, audit, finance, procurement,

public information, accounting, administrative, computing, safety, and

management analysis. Special training and skills in administrative

fields or special degrees are required.

(d) General Support. This occupational family is composed of

positions requiring special skills and knowledge, such as typing or

shorthand, and job-related experience. Clerical work usually involves

the processing and maintenance of records. Assistant work requires

knowledge of methods and procedures within a specific administrative

area. Other support functions include the work of secretaries, legal

clerks, guards, mail clerks, etc.

3. Fair Labor Standards Act

Fair Labor Standards Act (FLSA) exemption and nonexemption

determinations will be made consistent with criteria found in 5 CFR

part 551. All employees are covered by the FLSA unless they meet the

executive, administrative, or professional criteria for exemption. As a

general rule, the FLSA status can generally be matched to the

occupational families and pay bands found in Table 3. Exceptions to

these guidelines include supervisors/managers who meet the definitions

outlined in the OPM General Schedule Supervisory Guide. The generic

position descriptions will not be the sole basis for the FLSA

determination. Each position will be evaluated on a case by case basis

by comparing the duties and responsibilities assigned, the

classification standards for each pay band, under 5 CFR part 551

criteria.

B. Classification

1. Coverage

The present GS classification system has over 400 occupations (also

called series), which are divided into 22 groups. The present

occupational series will be maintained. New series may be added as

needed to reflect new occupations in the work force when established by

OPM.

2. Classification Standards

The classification system will be modified to facilitate pay

banding. The present classification standards will be used to create

local benchmark position description/standards for each pay band,

reflecting duties and responsibilities comparable to those described in

present classification standards for the span of grades represented by

each pay band. Present titles and series will continue to be used in

order to recognize the types of work being performed and educational

backgrounds and requirements of incumbents. Locally developed specialty

codes and OPM functional codes will be used to facilitate titling,

making qualification determinations, and assigning competitive levels

to determine retention status.

3. Position Descriptions and Classification Process

New standardized position descriptors will be developed to assist

managers in exercising delegated position classification authority.

Managers will identify the appropriate pay band and descriptor

definition and proceed to finalize the position description. A cover

sheet similar to the present DA Form 374 will be used to reflect their

classification decision. The cover sheet used will include a provision

for designating specialty codes. These specialty codes will be

developed to identify the special nature of work performed and will be

included on the final position descriptor.

Employees will be entitled to appeal the title, series, and pay

band level of their position to the DoD Field Advisory Service (FAS)

and to OPM. The appeal will be adjudicated using the position

classification provisions/criteria of this demonstration project.

Employees may appeal either to FAS or OPM; however, if they first

appeal to OPM, they may not then appeal to FAS.

C. Pay for Performance

The objective is to establish a pay system that will improve the

ability of WES to attract and retain quality employees. The new system

will be a pay-for-performance system and, when implemented, will result

in a redistribution of pay resources based upon individual performance.

1. Determining Pay Increases

Compensation will be allocated to employees through organizational

compensation pools. The WES Director, Commander and Deputy Director,

and Laboratory Directors at WES will manage their respective pools.

The compensation pools will have two components: funds for

performance pay increases (money previously available for within-grade

increases, quality step increases, and promotions between grades that

are banded under the project); and funds for General

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Schedule pay increases. Performance awards (cash awards and bonuses

presently allowed) and locality pay increases will continue under the

project and will be excluded from the compensation pools. The

compensation pools will be managed to ensure relative cost neutrality.

As a result, funds will not be shifted between pools.

Annual base pay increases paid from the performance pay increase

component of the compensation pools will be based on eligibility as

well as scores on the established standards as follows:

[GRAPHIC] [TIFF OMITTED] TN13MR97.008

Where:

PR=employee's annual performance-based pay raise, $

V=value of a share, percent

S=number of shares earned by employee based on performance

P=employee's salary prior to pay raise

The number of shares earned by an employee will vary from 0 to 4 and

will depend upon their performance score. A performance pay increase

may not cause the employee's rate of basic pay to exceed the maximum

rate of the bay band.

The value of a share will be computed in a manner to ensure that

the amount of money available for performance pay increases will not

exceed the amount of money in a compensation pool that is available for

raises. Therefore, the amount of money available annually within a pay

pool for performance-based pay raises is:

[GRAPHIC] [TIFF OMITTED] TN13MR97.009

Where:

A=average annual historical pay raise, percent

M=pay pool size, $

Pi=salary of employee i

n=number of employees in compensation pool

The share value (percent) is computed in a manner to ensure exact

expenditure of the amount of money in the compensation pool as follows:

[GRAPHIC] [TIFF OMITTED] TN13MR97.010

Where:

Si=number of shares earned by employee i based upon performance

ne=number of employees within compensation pool that are eligible

for a performance-based pay raise

A payout function that correlates number of shares earned by an

employee for a performance based pay raise to average performance score

will be similar to the plot shown in Figure 1.

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The annual General Schedule pay increase will be allocated as

follows:

(a) The first step is setting the percentage General Schedule

increase that will be given to all eligible employees. This amount will

be equal to the General Schedule increase authorized for GS employees.

All employees whose average performance score is 2.0 or greater will be

eligible for the increase. Employees with an average performance score

of less than 2.0 will be ineligible for the full General Schedule

increase and may receive either none or one-half of the increase. Pay

increases for employees receiving retained rates will be determined in

accordance with 5 U.S.C. 5363 except that those with an average

performance score of less than 2.0 may receive either none or one-

quarter of the increase in the maximum rate of basic pay for the

applicable pay band.

(b) The minimum and maximum pay rates of basic pay for each pay

band in an occupational family will be adjusted by any general pay

increase to reflect the new rates in accordance with the

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criteria reflected in Section III, Broadbanding, of this plan.

2. Performance Evaluation

The performance appraisal system will link compensation to

performance through annual performance evaluations and performance

ratings. Performance will be evaluated against generic performance

standards. Rating elements will be provided for all employees. All

rating elements will be critical and scored on a scale of 0 to 5. The

score will be based on employees performance as evaluated against

generic performance standards for each element. The supervisor will

discuss performance rating standards with the employee to clarify

performance criteria at the beginning of the rating period. The generic

performance standards, with the provision to add specific work plans,

will be used to evaluate employee performance. The standards will

describe the level of performance required for the employee to be rated

fully successful. Reviews will be conducted at least at mid-year to

evaluate employee progress in meeting performance standards. However,

WES interns in recognized career programs will be appraised semi-

annually until they complete their internship. The last performance

rating in each annual cycle will be considered to be the rating of

record for interns.

Since all employees will not have the same number of rating

elements, the element scores will be summed and averaged by the number

of elements rated to determine the overall performance score. The score

will be used for setting performance pay increases and determining

eligibility for performance awards.

Employees must have an average performance score of 2.5 and above

to be eligible for performance pay increases. Employees with an average

performance score of 2.0 or greater will be eligible for performance

awards and full General Schedule increases. Employees with an average

score of less than 2.0 will be ineligible for performance awards and

full General Schedule increases. A within-the-year review may be used

to reevaluate employees with performance scores of less than 2.0. If

the employee's performance has improved sufficiently since the last

rating period, the employee may be eligible for a nonretroactive

General Schedule pay raise at that time.

3. Awards

WES currently has an extensive awards program consisting of both

internal and external awards. On-the-spot, special act, and other

internal awards (both monetary and nonmonetary) will continue under the

project. MACOM, DA, and DoD awards and other honorary noncash awards

will be retained.

Cash awards may be given for performance and to recognize and

encourage special contributions. Awards can be made to individuals,

teams, or organizations. Awards must be approved at a managerial level

at least one level higher than the recommending official except in the

case where the WES Director is the recommender. Cash awards will not be

considered to be a part of base pay.

D. Pay Setting Provisions

1. Pay and Compensation

(a) Pay Ceilings. An employee's total monetary compensation paid in

a calendar year may not exceed the rate of basic pay for level I of the

Executive Schedule consistent with 5 U.S.C. 5307 and 5 CFR part 530,

subpart B. Each pay band will have its own pay ceiling, just as grades

do in the GS system. Basic pay rates for the various pay bands will be

directly keyed to the GS basic rates of pay except for pay band VI in

the Engineers and Scientists occupational family. Pay band VI will have

pay rates keyed to a minimum of 120% of the minimum rate of basic pay

for GS-15 basic pay with a maximum of the basic rate of pay established

for level IV of the Executive Schedule.

(b) Staffing Supplements. Employees assigned to occupational series

covered by special rates will be eligible for a staffing supplement if

the maximum adjusted rate for the banded GS grades to which assigned

exceeds the maximum GS locality rate for the banded grades (e.g.,

engineers in pay bands II and III). The staffing supplement is added to

the base pay, much like locality rates are added on to base pay. The

employee's total pay immediately after implementation of the

demonstration project will be the same as immediately before the

demonstration project, but a portion of the total will be in the form

of a staffing supplement. Adverse action and pay retention provisions

will not apply to the conversion process as there will be no change in

total salary. The staffing supplement is calculated as described below.

Upon conversion, the demonstration base rate will be established by

dividing the old maximum GS adjusted rate (special rate or locality

rate) by the staffing factor. The staffing factor will be determined by

dividing the maximum special rate for the banded grades by the GS

unadjusted rate corresponding to that special rate (step 10 of the GS

rate for the same grade as the special rate). The employee's

demonstration staffing supplement is derived by multiplying the

demonstration base rate by the staffing factor minus one. So the

employee's final demonstration special staffing rate equals the

demonstration base rate plus the special staffing supplement; this

amount will equal the employee's former maximum GS adjusted rate.

Simplified, the formula is:

[GRAPHIC] [TIFF OMITTED] TN13MR97.011

[[Page 12014]]

Example: In the case of a GS-801-11/03 employee who is receiving a

special salary rate, the salary before the demonstration project is

$42,944. The maximum special rate for a GS-801-11 Step 10 is $51,295

and the corresponding regular rate is $46,523. The staffing factor is

computed as follows:

[GRAPHIC] [TIFF OMITTED] TN13MR97.012

Then to determine the staffing supplement, multiply the

demonstration base by the staffing factor minus 1.

[GRAPHIC] [TIFF OMITTED] TN13MR97.013

The staffing supplement of $3,996 is added to the demonstration

base rate of $38,948 and the total salary is $42,944, which is the

salary of the employee before conversion to the demonstration project.

If an employee is in a band where the maximum GS adjusted rate for

the banded grades is a locality rate, when the employee is converted

into the demonstration, the demonstration base rate is derived by

dividing the employee's former GS maximum adjusted rate (locality or

special rate) by the applicable locality pay factor. The employee's

demonstration locality-adjusted rate will equal the employee's former

maximum GS adjusted rate.

Annual pay adjustment for employees in special rate occupations

will require recomputation of the staffing supplement. If OPM

discontinues or decreases special rates, employees will be entitled to

pay retention. Upon geographic movement, an employee who receives the

special staffing supplement will have the supplement recomputed. Any

resulting reduction in pay will not be considered an adverse action or

a basis for pay retention.

Established salary including the staffing supplement will be

considered basic pay for the same purposes as a locality rate under 5

CFR 531.606(b), i.e., for purposes of retirement, life insurance,

premium pay, and severance pay purposes and for advances in pay. It

will also be used to compute worker's compensation payments and lump

sum payments for accrued and accumulated annual leave.

2. Promotions

A promotion is the movement of an employee to a higher pay band

within the same occupational family or to a pay band in a different

occupational family which results in an increase in the employee's

salary. Progression within a pay band, whether by performance pay

increases or supervisory adjustments, are not subject to the provisions

of this section.

Promotions will be processed under competitive procedures in

accordance with merit principles and requirements. The following

actions are excepted from competitive procedures:

(a) Re-promotion to a position which is in the same pay band and

occupational family as the employee previously held on a permanent

basis within the competitive service.

(b) Promotion, reassignment, demotion, transfer, or reinstatement

to a position having promotion potential no greater than the potential

of a position an employee currently holds or previously held on a

permanent basis in the competitive service.

(d) Promotion without current competition when the employee was

appointed through competitive procedures to a position with a

documented career ladder.

(e) A temporary promotion, or detail to a position in a higher pay

band, of 180 days or less.

(f) Impact of person-in-the-job promotions.

(g) Promotion resulting from the accretion of duties and

responsibilities.

(h) A promotion resulting from the correction of an initial

classification error.

Upon promotion to a higher pay band, an employee will be entitled

to a 6 percent basic pay increase or the lowest level in the pay band

to which promoted, whichever is greater.

3. Link Between Promotion and Performance

Noncompetitive promotions (e.g., accretion of duties, recognition

of impact of person-in-job, career ladder) will require an acceptable

level of performance in their current position. To be promoted

noncompetitively from one band to the next within an occupational

family, an employee must meet the minimum qualifications for the job

and have a current average performance score of 2.5 or above (Section

III, Performance Evaluation) or equivalent under a different

performance management system (an equivalence chart will be developed

by HRM specialists and included in the implementation instructions).

Selection of employees through competitive procedures will require a

current average performance score of 2.5 or above.

4. Supervisory Pay Adjustments

Supervisory pay adjustments may be used, at the discretion of the

WES Director, to compensate employees in the Engineers and Scientists

occupational family in supervisory positions. Supervisory pay

adjustments are increases to the supervisor's basic rate of pay,

ranging up to 10 percent of that pay rate, subject to the constraint

that the adjustment may not cause the employee's basic rate of pay to

exceed the pay band maximum rate. Only employees in supervisory

positions with formal supervisory authority meeting that required for

coverage under the OPM GS Supervisory Guide will be considered for the

supervisory pay adjustment. Criteria to be considered in determining

the pay increase percentage include the following organizational and

individual employee factors: needs of the organization to attract,

retain, and motivate high quality supervisors; budgetary constraints;

years of supervisory experience; amount of supervisory training

received; performance; and managerial impact on the organization.

Conditions, after the date of conversion into the demonstration

project, under which the application of a supervisory pay adjustment

will be considered are as follows:

(a) New hires into supervisory positions will have their initial

rate of basic pay set at the supervisor's discretion within the pay

range of the applicable pay band. This rate of pay may include a

supervisory pay

[[Page 12015]]

adjustment determined using the ranges and criteria outlined above.

(b) An employee selected for a supervisory position that is within

the employee's current pay band may also be considered for a

supervisory pay adjustment.

adjustment and is subsequently selected for another supervisory

position, within the same pay band, then the supervisory pay adjustment

will be redetermined.

(d) An employee promoted to a supervisory position in a higher pay

band may be considered for a supervisory adjustment in addition to the

pay increase that resulted from the promotion.

Supervisors, upon initial conversion into the demonstration project

into the same, or substantially similar position, will be converted at

their existing basic rate of pay and will not be offered a supervisory

pay adjustment.

Before supervisory employees may receive the pay adjustment, they

must sign a statement acknowledging that the entire adjustment will be

immediately withdrawn if they are removed from the supervisory position

because of unacceptable performance or conduct. Supervisory employees

who are reassigned to a nonsupervisory position for any other reasons

(i.e., employee choice, management directed reassignment, or RIF) will

receive one-half of the pay adjustment for one year following the

reassignment. Eliminations or reductions in supervisory pay adjustments

are not adverse actions, are not subject to appeal, and are not covered

under pay retention provisions.

5. Supervisory Pay Differentials

Supervisory pay differentials may be used, at the discretion of the

WES Director, to incentivize and reward E&S supervisors who are in pay

bands IV and V whose pay is at the maximum rate of the pay band. Formal

supervisory authority meeting that required for coverage under the OPM

GS Supervisory Guide is required. A supervisory pay differential is a

cash incentive, paid out on a pay period basis, which is not included

as part of the supervisor's basic rate of pay. The differential may be

up to 10 percent of the supervisor's basic rate of pay. Criteria to be

considered in determining the amount of this supervisory pay

differential includes those identified for supervisory pay adjustments.

The supervisory pay differential may be considered, either during

conversion into or after initiation of the demonstration project. The

differential will be terminated if the employee is removed from a

supervisory position, regardless of cause.

As specified in the Supervisory Pay Adjustment Section, all

personnel actions involving a supervisory differential will require a

statement signed by the employee acknowledging that the differential

may be terminated or reduced at the discretion of the WES Director. The

termination or reduction of the differential is not an adverse action,

is not subject to appeal, and is not covered under pay retention

provisions.

E. Hiring and Placement Authorities

1. Modified Term Appointments

WES conducts many research and development projects that range from

3 to 6 years. The current 4-year limitation on term appointments

imposes a burden on laboratory managers by forcing the termination of

some term employees prior to completion of projects they were hired to

support. This disrupts the research and development process and reduces

the ability of WES to serve its customers.

Under the demonstration project, WES will have the authority to

hire individuals under modified term appointments. These appointments

will be used to fill positions for a period of more than 1 year but not

more than 5 years when the need for employee's services is not

permanent. The modified term appointments differ from term employment

as described in 5 CFR part 316 in that they may be made for a period

not to exceed 5, rather than 4 years. The WES Director is authorized to

extend a term appointment 1 additional year.

Employees hired under the modified term appointment authority may

be eligible for conversion to career-conditional appointments. To be

converted, the employee must: have been selected for the term position

under competitive procedures, with the announcement specifically

stating that the individual(s) selected may be eligible for conversion

to a career-conditional appointment at a later date; have served 2

years of continuous service in the term position; be selected under WES

merit promotion procedures for the permanent position; and have a

current performance score of 2.5 or better.

Employees serving under term appointments at the time of conversion

to the demonstration project will be converted to the new modified term

appointments provided they were hired for their current positions under

competitive procedures. These employees will be eligible for conversion

to career-conditional appointment if they have a current performance

score of 2.5 or better and are selected under merit promotion

procedures for the permanent position after having completed 2 years of

continuous service. Time served in temporary or term positions prior to

conversion to the modified term appointment is creditable, provided the

service was continuous. Employees serving under modified term

appointments under this plan will be covered by the plan's pay-for-

performance system.

2. Extended Probationary Period

A new employee needs to demonstrate adequate contribution during

all cycles of a research effort for a laboratory manager to render a

thorough evaluation. The current 1-year probationary period will be

extended to 2 years for all newly hired career employees in the

Engineers and Scientists occupational family. The purpose of extending

the probationary period is to allow supervisors an adequate period of

time to fully evaluate an employee's contribution and conduct.

Aside from extending the time period, all other features of the

current probationary period, including the criteria for crediting prior

service and the limited notice and appeal rights, are retained. The

requirements for conversion to career tenure are unchanged. Employees

appointed prior to the implementation date will not be affected.

Probationary employees will be terminated when the employee fails

to demonstrate proper conduct, technical competency, and/or adequate

work contribution for continued employment. When WES decides to

terminate an employee serving a probationary period because their work

contribution or conduct during this period fails to demonstrate their

fitness or qualifications for continued employment, it shall terminate

their services by written notification of the reasons for separation

and the effective date of the action. The information in the notice as

to why the employee is being terminated shall, as a minimum, consist of

WES's conclusions as to the inadequacies of their work contribution or

conduct.

3. Voluntary Emeritus Program

Under the demonstration project, the WES Director will have the

authority to offer retired or separated individuals (engineers and

scientists) voluntary assignments in the laboratory. This

[[Page 12016]]

authority will include individuals who have retired or separated from

Federal service. Voluntary Emeritus Program assignments are not

considered ``employment'' by the Federal Government (except for

purposes of injury compensation). Thus, such assignments do not affect

an employee's entitlement to buy-outs or severance payments based on an

earlier separation from Federal service. The Voluntary Emeritus Program

will ensure continued quality research while reducing the overall

salary line by allowing higher paid individuals to accept retirement

incentives with the opportunity to retain a presence in the scientific

community. The program will be of most benefit during manpower

reductions as senior E&Ss could accept retirement and return to provide

valuable on-the-job training or mentoring to less experienced

employees.

To be accepted into the emeritus program, a volunteer must be

recommended by a Laboratory Director to the WES Director. Everyone who

applies is not entitled to a voluntary assignment. The WES Director

must clearly document the decision process for each applicant (whether

accepted or rejected) and retain the documentation.

To ensure success and encourage participation, the volunteer's

federal retirement pay (whether military or civilian) will not be

affected while serving in a voluntary capacity. Retired or separated

federal employees may accept an emeritus position without a waiting

period.

Volunteers will not be permitted to monitor contracts on behalf of

the government or to participate on any contracts or solicitations

where a conflict of interest exists. The same rules that currently

apply to source selection members will apply to volunteers.

An agreement will be established between the volunteer and the WES.

The agreement will be reviewed by the local Office of Counsel for

ethics determinations under the Joint Ethics Regulation. The agreement

must be finalized before the assumption of duties and shall include:

(a) A statement that the voluntary assignment does not constitute

an appointment in the civil service and is without compensation and any

and all claims against the Government because of the voluntary

assignment are waived by the volunteer.

(b) A statement that the volunteer will be considered a federal

employee for the purpose of injury compensation.

(d) Length of agreement (defined by length of project or time

defined by weeks, months, or years).

(e) Support provided by the laboratory (travel, administrative,

office space, supplies).

(f) A one page Statement of Duties.

(g) A provision that states no additional time will be added to a

volunteer's service credit for such purposes as retirement, severance

pay, and leave as a result of being a member of the Voluntary Emeritus

Program.

(h) A provision allowing either party to void the agreement with 10

working days written notice.

(i) The level of security access required (any security clearance

required by the assignment will be managed by the laboratory while the

volunteer is a member of the Voluntary Emeritus Program).

F. Employee Development

The objective of the employee development program will be to

develop the competence of employees for maximum achievement of

Laboratory, MACOM, DA, and DoD goals. WES will continue its employee

development programs, such as local training, off-site training, long-

term training, and developmental assignments. Under this Project, the

opportunity to apply for expanded developmental opportunities to

include sabbaticals and training for degrees, which was previously

restricted, will be made available to permanent employees.

1. Sabbatical

WES will have the authority to grant sabbaticals to career

employees to permit them to engage in study or uncompensated work

experience that will contribute to their development and effectiveness.

Each sabbatical should benefit WES as well as increase the employee's

individual effectiveness. Examples are as follows: advanced academic

teaching, study, or research; self-directed (independent) or guided

study; and on-the-job work experience with a public, private, or

nonprofit organization. Each recipient of a sabbatical must sign a

continued service agreement and agree to serve a period equal to at

least three times the length of the sabbatical.

2. Degree Training

Degree training is an essential component of an organization that

requires continuous acquisition of advanced and specialized knowledge.

Degree training in the academic environment of DoD laboratories is also

a critical tool for recruiting and retaining employees with or

requiring critical skills. Constraints under current law and regulation

limit degree payment to shortage occupations. In addition, current

government-wide regulations authorize payment for degrees based only on

recruitment or retention needs. Degree payment is currently not

permitted for non-shortage occupations involving critical skills.

Under the Personnel Demonstration Project, WES will expand the

authority to provide degree training for purposes of meeting critical

skill requirements, to ensure continuous acquisition of advanced and

specialized knowledge essential to the organization, and to recruit and

retain personnel critical to the present and future requirements of the

organization. It is expected that the degree payment authority will be

used primarily for attainment of advanced degrees.

G. Reduction in Pay or Removal Actions

Employees covered by the project will be evaluated under a

performance evaluation system that affords grievance and/or appeal

rights the same as those provided currently.

1. Unacceptable Performance

Employees whose performance is unsatisfactory (equivalent to a

performance score of 0 on any critical element) at anytime during the

year shall be placed in a Performance Improvement Plan (PIP). If in a

PIP at the end of a rating period, the employee will not be given a

performance rating while in that program. If performance remains

unsatisfactory upon completion of the PIP, the employee will be

separated from his or her position or reduced to a lower pay band. If

performance becomes satisfactory, the employee will receive a

performance rating of record and appropriate adjustments to pay may be

made at that time (i.e. granting General Schedule increase). These

performance-based actions will follow the same procedures as current

performance-related removals and reductions in grade under Chapter 43

or Chapter 75 when appropriate.

2. Placement in a Lower Pay Band

An employee who is determined ineligible for a performance award

may receive either none or one-half the General Schedule pay increase

and will not receive a performance pay increase or performance award.

Because the minimum pay rate for each pay band will be increased each

year by the amount of the General Schedule increase, it is possible

that the new minimum rate of a pay band will exceed the basic pay of an

employee in that band who did not receive the full

[[Page 12017]]

General Schedule increase. In these cases, the employee will be moved

to the next lower band level and the action will be considered a

demotion. This will not be considered an adverse action, will not be

appealable through a statutory appeals process, and will not be covered

under grade retention provisions.

G. Revised Reduction in Force (RIF) Procedures

Modifications include limiting competitive areas to occupational

families and increasing the emphasis on performance in the RIF process.

These modifications will increase the probability of retaining the

highest performing individuals in their positions and will increase the

probability of displacing the lowest performing individuals.

1. Competitive Areas

For RIF purposes, the competitive area will be the occupational

family in which the employee is assigned and will cover all geographic

locations.

2. Retention

Retention registers will be established based on the following

criteria listed in order of priority: tenure status (Tenure I-career,

Tenure II-career conditional, Tenure III-modified term); veteran's

preference; most recent employee performance score; and service

computation date. Modified term employees within the affected

occupational family will be separated before permanent Tenure I and II

employees. The present RIF system essentially remains in effect, except

that performance scores are part of the retention order. Performance

scores will not be used to adjust the service computation date. A

preference eligible with a compensable service-connected disability of

30 percent or more may displace employees in positions equivalent to 5

GS grades below the minimum grade level of his/her current pay band.

Increasing the emphasis on job performance will help ensure the

retention of outstanding individuals in RIF situations.

3. Grade and Pay Retention

Except where waived or modified in the waiver section of this plan,

grade and pay retention will follow current law and regulations.

IV. Training

The key to the success or failure of the proposed demonstration

project will be the training provided for all involved. This training

will not only provide the necessary knowledge and skills to carry out

the proposed changes, but will also lead to commitment to the program

on the part of all participants. Training will be tailored to fit the

requirements of every employee included and will fully address employee

concerns to ensure that everyone has a comprehensive understanding of

the program.

Training at the beginning of implementation and throughout the

demonstration will be provided to supervisors, employees, and the

administrative staff responsible for assisting managers in effecting

the changeover and operation of the new system.

The elements to be covered in the orientation portion of this

training will include the following: a description of the system; how

employees are converted into the system; pay adjustment process;

familiarization with the new position descriptions and performance

objectives; the individual performance rating process; the

reconsideration process; and the demonstration project administrative

and formal evaluation process.

A. Supervisors

The focus of this project on management-centered personnel

administration, with increased supervisory and managerial personnel

management authority and accountability, demands thorough training of

supervisors and managers in the knowledge and skills that will prepare

them for their new responsibilities. Training will include detailed

information on the policies and procedures of the demonstration

project, skills training in using the classification system, position

description preparation, and performance evaluation. Additional

training may focus on nonproject procedural techniques such as

interpersonal and communication skills.

B. Administrative Staff

The administrative staff, generally personnel specialists,

technicians, and administrative officers, will play a key role in

advising, training, and coaching supervisors and employees in

implementing the demonstration project. This staff will need training

in the procedural and technical aspects of the project.

C. Employees

WES will train employees covered under the demonstration project.

In the months leading up to the implementation date, meetings will be

held for employees to fully inform them of all project decisions,

procedures, and processes.

V. Conversion

A. Conversion to the Demonstration Project

Initial entry into the demonstration project for covered employees

will be accomplished through a full employee protection approach that

ensures each employee an initial place in the appropriate occupational

family and pay band without loss of pay. An automatic conversion from

current GS/GM grade and pay into the new broad banding system will be

accomplished. Except for special rate employees, each employee will be

converted at their current GS salary at the time of conversion.

Special conversion rules will apply to special rate employees (see

Section III, Pay Setting Provisions). Employees who enter the

demonstration project later by lateral reassignment or transfer will be

subject to the same pay conversion rules. Employees serving under

regular term appointments at the time of project implementation will be

converted to the modified term appointment. Position announcements,

etc. will not be required for these term appointments. If conversion

into the demonstration project is accompanied by a geographic move, the

employee's GS pay entitlements in the new geographic area must be

determined before performing the pay conversion.

Employees who are on temporary promotions at the time of conversion

will be converted to a pay band commensurate with the grade of the

position to which temporarily promoted. At the conclusion of the

temporary promotion, the employee will revert to the pay band which

corresponds to the grade of record. When a temporary promotion is

terminated, pay will be determined as described in Section III, Pay

Setting Provisions. The only exception will be if the original

competitive promotion announcement stipulated that the promotion could

be made permanent; in these cases, actions to make the temporary

promotion permanent will be considered and, if implemented, will be

subject to all existing priority placement programs.

At the time of conversion, each employee will be given a lump sum

cash payment for the time credited (in weeks) to the employee toward

what would have been the employee's next within-grade increase. This

step buy-in is applicable only to employees converted into the project

at the time of its initial establishment.

Any OCONUS employee covered by the project will continue to be

ineligible for locality pay. The maximum basic

[[Page 12018]]

salary payable in the pay band will be limited to the maximum rate of

pay on the GS salary table which does not include any locality pay.

B. Conversion From the Demonstration Project

If a demonstration project employee is moving to a position not

under the demonstration project, or if the project ends and each

project employee must be converted back to the GS system, the following

procedures will be used to convert the employee's project pay band to

an equivalent grade and the employee's project rates of pay to

equivalent rates of pay. The converted grade and rates of pay must be

determined before movement or conversion out of the demonstration

project and any accompanying geographic movement, promotion, or other

simultaneous action. For conversions upon termination of the project

and for lateral reassignments, the converted grade and rates will

become the employee's actual grade and rates after leaving the

demonstration project (before any other action). For transfers,

promotions, and other actions, the converted grade and rates will be

used in applying any pay movement out of the project (i.e., promotion

rules, highest previous rate rules, pay retention rules) as if the

converted grade and rates were actually in effect immediately before

the employee left the demonstration project.

1. Grade-Setting Provisions. An employee in a pay band

corresponding to a single grade is converted to that grade. An employee

in a pay band corresponding to two or more grades is converted to one

of those grades according to the following rules:

(a) The employee's adjusted rate of basic pay under the

demonstration project (including any locality payment or staffing

supplement but excluding any supervisory pay adjustment) is compared

with step 4 rates in the highest applicable GS rate range. For this

purpose, a ``GS rate range'' includes a rate range in the GS base

schedule, the locality rate schedule for the locality pay area in which

the position is located, or the appropriate special rate schedule for

the employee's occupational series, as applicable. If the series is a

two-grade interval series, only odd-numbered grades are considered

below GS-11.

(b) If the employee's adjusted project rate equals or exceeds the

applicable step 4 rate of the highest GS grade in the band, the

employee is converted to that grade.

applicable step 4 rate of the highest grade, the adjusted rate is

compared with the step 4 rate of the second highest grade in the

employee's pay band. If the employee's adjusted rate equals or exceeds

step 4 rate of the second highest grade, the employee is converted to

that grade.

(d) This process is repeated for each successively lower grade in

the band until a grade is found in which the employee's adjusted

project rate equals or exceeds the applicable step 4 rate of the grade.

The employee is then converted at that grade. If the employee's

adjusted rate is below the step 4 rate of the lowest grade in the band,

the employee is converted to the lowest grade.

(e) Exception: If the employee's adjusted project rate exceeds the

maximum rate of the grade assigned under the above-described ``step 4''

rule but fits in the rate range for the next higher applicable grade

(i.e., between step 1 and step 4), then the employee shall be converted

that next higher applicable grade.

(f) Exception: An employee will not be converted to a lower grade

than the grade held by the employee immediately preceding a conversion,

lateral reassignment, or lateral transfer into the project, unless

since that time the employee has undergone a reduction in band.

2. Pay-Setting Provisions. An employee's pay within the converted

GS grade is set by converting the employee's demonstration project

rates of pay to GS rates of pay in accordance with the following rules:

(a) The pay conversion is done before any geographic movement or

other pay-related action that coincides with the employee's movement or

conversion out of the demonstration project.

(b) An employee's adjusted rate of basic pay under the project

(including any locality payment or staffing supplement but excluding

any supervisory pay adjustment) is converted to a GS adjusted rate on

the highest applicable GS rate range for the converted GS grade. For

this purpose, a ``GS rate range'' includes a rate range in the GS base

schedule, an applicable locality rate schedule, or an applicable

special rate schedule.

range, the employee's adjusted project rate is converted to a GS

locality rate of pay. If this rate falls between two steps in the

locality-adjusted schedule, the rate must be set at the higher step.

The converted GS unadjusted rate of basic pay would be the GS base rate

the corresponding to the converted GS locality rate (i.e., same step

position). If this employee is also covered by a special rate schedule

as a GS employee, the converted special rate will be determined based

on the GS step position. This underlying special rate will be basic pay

for certain purposes for which the employee's higher locality rate is

not basic pay.

(d) If the highest applicable GS rate range is a special rate

range, the employee's adjusted project rate is converted to a special

rate. If this rate falls between two steps in the special rate

schedule, the rate must be set at the higher step. The converted GS

unadjusted rate of basic pay will be the GS rate corresponding to the

converted special rate (i.e., same step position).

3. Within-Grade Increase--Equivalent Increase Determinations.

Service under the demonstration project since the last pay-for-

performance determination is creditable for within-grade purposes upon

conversion back to the GS pay system. Performance pay increases

(including a zero increase) under the demonstration project are

equivalent increases for the purpose of determining the commencement of

a within-grade increase waiting period under 5 CFR 531.405(b).

VI. Project Duration

Public Law 103-337 removed any mandatory expiration date for this

demonstration. The project evaluation plan adequately addresses how

each intervention will be comprehensively evaluated for at least the

first 5 years of the demonstration (Proposed Plan for the Evaluation of

the DoD Laboratory Demonstration Program, OPM, 1995). Major changes and

modifications to the interventions can be made through announcement in

the Federal Register and would be made if formative evaluation data

warranted. At the 5 year point, the entire demonstration will be

reexamined for either: permanent implementation; change and another 3-5

year test period; or expiration.

VII. Evaluation Plan

Authorizing legislation mandated evaluation of the demonstration

project to assess the merits of project outcomes and to evaluate the

feasibility of applications to other federal organizations. A

comprehensive and methodologically rigorous evaluation of the personnel

system changes will be carried out. The overall evaluation consists of

two components--external and internal evaluation. The external

evaluation will be conducted by OPM's Personnel Resources and

Development Center (PRDC) to benefit from their extensive experience

evaluating demonstration projects. PRDC will serve in the role of

external evaluator to

[[Page 12019]]

ensure the integrity of the evaluation process, outcomes, and

interpretation of results. Their external evaluation will be

supplemented by an internal evaluation to be accomplished by the staff

of WES. Selected parts of the evaluation will be completed using

contractor support. The contractor(s) will be well qualified and

experienced with demonstrated expertise in performing relevant support

functions.

Essential elements of the evaluation plan are set forth below. The

demonstration project is a complex experiment to be conducted in a

dynamic environment over several years. Modifications and refinements

to the evaluation plan will be made as required by mid-course project

changes. All additions, deletions, and refinements to the current plan

will be fully documented and explained as part of the evaluation

reporting process. The main purpose of the evaluation is to determine

the effectiveness of the personnel system changes described by the

individual interventions. Every effort will be made to establish direct

cause-and-effect relationships between the interventions and

effectiveness criteria. An ancillary objective is to assess the effects

of the interventions on improved organizational performance. An

indirect causal link is hypothesized between the personnel system

changes and improved organizational effectiveness, i.e., improved

laboratory performance, mission accomplishment, and customer

satisfaction. The current personnel management system with its many

rigid rules and regulations often is perceived as a barrier to mission

accomplishment. Together, the demonstration project initiatives are

intended to remove some of those barriers, and therefore, are expected

to contribute to improved laboratory performance.

The evaluation effort will be accomplished in four distinct phases:

(a) Design phase--includes development of the evaluation model,

selection of experimental and comparison sites, and collection of

baseline data prior to implementation.

(b) Implementation phase--includes actual project implementation

and monitoring of the degree and support of implementation to assure

that each of the project interventions has been operationalized as

originally conceived.

analysis for five years for purposes of evaluating the effects of the

interventions. Periodic reports and annual summaries will be prepared

to document the findings.

(d) Summative evaluation phase--focuses on summary evaluation and

overall assessment of the project's impact, including presentation of

conclusions and final recommendations upon completion of the project.

An intervention impact model (Appendix A) will be used to measure

the effectiveness of the various personnel system changes or

interventions. Additional measures will be developed as new

interventions are introduced or existing interventions modified with

consistent with expected effects. Measures may also be deleted when

appropriate. Activity specific measures may also be developed to

accommodate specific needs or interests which are locally unique.

The evaluation model for the Demonstration Project identifies

elements critical to an evaluation of the effectiveness of the

interventions. The overall evaluation approach will also include

consideration on context variables that are likely to have an impact on

project outcomes (e.g., HRM regionalization, downsizing, cross-service

integration, and the general state of the economy). However, the main

focus of the evaluation will be on intermediate outcomes, i.e., the

results of specific personnel system changes which are expected to

improve human resources management. The ultimate outcomes are defined

as improved organizational effectiveness, mission accomplishment, and

customer satisfaction.

Data from a variety of different sources will be used in the

evaluation. Information from existing management information systems

supplemented with perceptual data will be used to assess variables

related to effectiveness. Multiple methods provide more than one

perspective on how the demonstration project is working. Information

gathered through one method will be used to validate information

gathered through another. Confidence in the findings will increase as

they are substantiated by the different collection methods. The

following types of data will be collected as part of the evaluation:

workforce data; personnel office data; employee attitudes and feedback

using surveys, structured interviews and focus groups; local activity

histories, and core measures of laboratory effectiveness.

VIII. Demonstration Project Costs

A. Step Buy-Ins

Under the current pay structure, employees progress through their

assigned grade in step increments. Since this system is being replaced

under the demonstration project, employees will be awarded that portion

of the next higher step they have completed up until the effective date

of implementation. As under the current system, supervisors will be

able to withhold these partial step increases if the employee's

performance is not at an acceptable level of competence.

At the time of conversion, each employee will be given a lump sum

cash payment for the time credited (in weeks) to the employee toward

what would have been the employee's next within-grade increase.

Employees at the top step of their grade on the date of implementation

will not be eligible for within-grade increase equity adjustments since

they are already at the top of the step scale.

B. Development Costs

Costs associated with the development of the personnel

demonstration system include software automation, training, and project

evaluation. All funding will be provided through the WES budget. The

projected annual expenses for each area is summarized in Table 4.

Project evaluation costs are not expected to continue beyond the first

6 years.

Table 4.--Projected Developmental Costs

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

FY 96 FY 97 FY 98 FY 99 FY 00 FY 01

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Training....................... $97K $19K .................. .................. .................. ..................

Project Evaluation............. 25K 60K $60K $60K $60k $60K

Automation..................... 80K 10K

Totals..................... 202K 89K 60K 60K 60k 60K

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[[Page 12020]]

IX. Required Waivers to Law and Regulations

Public Law 103-337 gave the DoD the authority to experiment with

several personnel management innovations. In addition to the

authorities granted by the law, the following are the waivers of law

and regulation that will be necessary for implementation of the

Demonstration Project. In due course, additional laws and regulations

may be identified for waiver request.

A. Waivers to Title 5, U.S. Code

Section 3111, Acceptance of volunteer service

Section 3324, Appointments to positions classified above GS-15

Section 3341, Details

Section 4107, Non-Government facilities; restrictions (to the extent

that training may be paid for the purpose of an employee to obtain a

degree)

Section 4108, Employee agreements; service after training (to the

extent that continued service is required only for long-term training

and sabbaticals)

Sections 5101-5111, Purpose, definitions, basis, classification of

positions, review, authority (to the extent that white collar employees

will be covered by broadbanding. Pay category determination criteria

for Federal Wage System positions remain unchanged).

Sections 5301; 5302 (8), and (9); 5303; and 5304, Pay comparability

system (Sections 5301, 5302, and 5304 are waived only to the extent

necessary to allow: (1) Demonstration project employees, except

employees in band VI of the Engineers and Scientists occupational

family, to be treated as General Schedule employees; (2) basic rates of

pay under the demonstration project to be treated as scheduled rates of

basic pay; and (3) employees in band VI of the Engineers and Scientists

occupational family to be treated as ST employees for the purposes of

these provisions)

Section 5305, Special pay authority

Sections 5331-5336, General Schedule pay rates

Sections 5361-5366, Grade and pay retention (to the extent necessary to

(1) Replace ``grade'' with ``pay band'; (2) allow demonstration project

employees to be treated as General Schedule employees; (3) provide that

pay band retention provisions do not apply to movements to a lower pay

band as a result of receiving no or only part of a general pay increase

because of poor performance; (4) provide that pay retention provisions

do not apply to conversions from General Schedule special rates to

demonstration project pay, as long as total pay is not reduced, and to

reductions in pay due solely to the removal of all or part of a

supervisory pay adjustment upon leaving a supervisory position; and (5)

provide that an employee on pay retention whose performance rating is

less than 2.0 is not entitled to 50 percent of the amount of the

increase in the maximum rate of basic pay payable for the pay band of

the employee's position. This waiver does not apply to employees in

band VI of the Engineers and Scientists occupational family who are to

be treated as ST employees for the purposes of applying the grade and

pay retention provisions.)

Section 5545, Night, standby, irregular, and hazardous duty

differential (to the extent necessary to allow demonstration project

employees to be treated as General Schedule employees. This waiver does

not apply to employees in band VI of the Engineers and Scientists

occupational family.)

Sections 5753, 5754, and 5755, Recruitment and relocation bonuses,

retention allowances, and supervisory differentials (to the extent

necessary to allow: (1) Employees and positions under the demonstration

project to be treated as employees and positions under the General

Schedule; and (2) employees in band VI of the Engineers and Scientists

occupational family to be treated as ST employees)

Section 7512(3), Adverse actions (to the extent necessary to (1)

substitute ``pay band'' for ``grade.''

Section 7512(4), Adverse actions (to the extent necessary to provide

that adverse action provisions do not apply to: (1) Conversions from

General Schedule special rates to demonstration project pay, as long as

total pay is not reduced; and (2) reductions in pay due to removal of

all or part of a supervisory adjustment)

B. Waivers to Title 5, Code of Federal Regulations

Part 300.601-605, Time-in-grade restrictions (to the extent that time-

in-grade restrictions are eliminated)

Part 308.101-103, Volunteer service (to the extent that volunteer

service is unrestricted)

Parts 315.801(a) and 315.802(a), Length of probationary period (to the

extent that the probationary period for engineers and scientists is

increased to 2 years)

Part 316.301, Term appointment (to the extent that modified term

appointments may cover a maximum period of 6 years)

Part 316.303, Tenure of term employees (to the extent that term

employees may compete for permanent status through local merit

promotion plans)

Part 335.103, Covering the length of details and temporary promotions

Part 351.402(b), Competitive area (to the extent that occupational

family is the competitive area)

Part 351.403, Competitive level (to the extent that pay band is

substituted for grade)

Part 351.504, Retention standing, credit for performance (to the extent

that service credit will not be modified based on performance rating)

Part 351.701, Assignment involving displacement (to the extent that a

performance score of 1 is substituted for level 2 and bumping and

retreating will be limited to no more than 2 pay bands except for 30

percent compensable veterans who can retreat to the equivalent of 5 GS

grades)

Part 430.101-210, subparts A and B, Performance Management System

Part 432.103-105, Performance based reduction-in-grade and removal

actions (to the extent that pay band is substituted for grade,

reduction in band level as a result of non-receipt of General Schedule

increases because of poor performance is not an adverse action, and

unacceptable performance is redefined)

Part 511.101, 201-203, General provisions and coverage of the General

Schedule (to the extent that positions are covered by broadbanding)

Part 511.601-612, Classification appeals (to the extent that positions

are covered by broadbanding)

Part 530, subpart C, Special salary rates

Part 531, subparts B, D, and E, Determining the rate of basic pay,

within-grade increases, and quality step increases

Part 531, subpart F, Locality-based comparability payments (to the

extent necessary to allow: (1) demonstration project employees, except

employees in band VI of the Engineers and Scientists occupational

family, to be treated as General Schedule employees; (2) basic rates of

pay under the demonstration project to be treated as scheduled annual

rates of pay; and (3) employees in band VI of the Engineer and

Scientist occupational family to be treated as ST employees)

Part 536, Grade and pay retention (to the extent necessary to: (1)

replace ``grade'' with ``pay band'; (2) provide

[[Page 12021]]

that pay band retention provisions do not apply to movements to a lower

pay band as a result of receiving no or only part of a general pay

increase because of poor performance; (3) provide that pay retention

provisions do not apply to conversions from General Schedule special

rates to demonstration project pay, as long as total pay is not

reduced, and to reductions in pay due solely to the removal of all or

part of a supervisory pay adjustment upon leaving a supervisory

position; and (4) provide than an employee on pay retention whose

performance rating is less than 2.0 is not entitled to 50 percent of

the amount of the increase in the maximum rate of basic pay payable for

the pay band of the employee's position. This waiver does not apply to

employees in band VI of the Engineers and Scientists occupational

family who are to be treated as ST employees for the purposes of

applying the grade and pay retention provisions)

Part 550.703, Severance pay (to the extent necessary to modify the

definition of ``reasonable offer'' by replacing ``two grade or pay

levels'' with ``one band level'' and ``grade or pay level'' with ``band

level''

Part 550.902, Hazardous duty differential, definition of ``employee''

(to the extent necessary to allow demonstration project employees to be

treated as General Schedule employees. This waiver does not apply to

employees in band VI of the Engineers and Scientists occupational

family)

Part 575, subparts A, B, C, and D, Recruitment bonuses, relocation

bonuses, retention allowances and supervisory differentials (to the

extent necessary to allow (1) employees and positions under the

demonstration project to be treated as employees and positions under

the General Schedule and (2)employees in band VI of the Engineers and

Scientists occupational family to be treated as ST employees)

Part 752.401 (a)(3), Adverse actions (this provision is waived only to

the extent necessary to (1) substitute ``pay band'' for ``grade'' and

(2) provide that moving a lower pay band as a result of not receiving

the full amount of a general pay increase because of poor performance

is not an adverse action)

Part 752.401 (a)(4), Adverse actions (to the extent necessary to

provide that adverse action provisions do not apply to: (1) conversions

from General Schedule special rates to demonstration project pay, as

long as total pay is not reduced; and (2) reductions in pay due to the

removal of all or part of a supervisory adjustment)

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[FR Doc. 97-6169 Filed 3-10-97; 8:45 am]

BILLING CODE 6325-01-C

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