Proposed Laboratory Personnel Management Demonstration Project; Department of the Army, U. S. Army Research Laboratory, Adelphi, MD

SUMMARY: Title VI 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 OPM, to carry out personnel

demonstration projects at DOD Science and Technology (S&T) reinvention

laboratories. These projects are to be similar to the demonstration

project at China Lake. The Army is proposing a demonstration project

initially to cover five of its S&T reinvention laboratories. Each of

the laboratories vary in their approaches to classification and

compensation, performance management, and reduction in force. This

proposal is for the U.S. Army Research Laboratory (ARL).

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

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

1. Thursday, April 17, 1997, at 10:00 a.m., in Adelphi, Maryland.

2. Friday, April 18, 1997, at 10:00 a.m., in Aberdeen Proving Ground,

Maryland.

At the time of the hearings, interested persons or organizations

may present their written or oral comments on the proposed

demonstration project. The hearings 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 submitted to supplement oral testimony during the

public comment period.

ADDRESSES: Comments may be mailed to Fidelma A. Donahue, U. S. Office

of Personnel Management, 1900 E Street, NW, Room 7460, Washington, DC

20415; public hearings will be held at the following locations:

1. Adelphi--U.S. Army Research Laboratory, Building 205 Auditorium,

2800 Powder Mill Road, Adelphi, Maryland.

2. Aberdeen Proving Ground--Post Theatre, Aberdeen Boulevard &

Frankford Road, Building 3245, Aberdeen Proving Ground, Maryland.

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

Mr. Jack R. Wilson, II, U.S. Army Research Laboratory Building 202,

2800 Powder Mill Road, Adelphi, MD 20783-1197, 301-394-1105; (2) 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, 202-606-1138.

SUPPLEMENTARY INFORMATION: Since 1966, at least 19 studies of

Department of Defense (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

classification, broadbanding, a pay for performance (PFP) system,

enhanced hiring flexibilities, modified reduction in force (RIF)

procedures and expanded development opportunities.

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/Expected Benefits

D. Participating Organizations

E. Participating Employees and Union Representation

F. Project Design

G. Experimentation and Revision

III. Personnel System Changes

A. Broadbanding

B. Classification

C. Pay for Performance (PFP)

D. Hiring and Appointment Authorities

E. Internal Placements and Pay Setting

F. Employee Development

G. Reduction in Force (RIF)

H. Grievances and Disciplinary Actions

IV. Implementation Training

V. Conversion

VI. Project Duration

VII. Evaluation Plan

VIII. Demonstration Project Costs

IX. Required Waivers to Law and Regulation

Appendix A--ARL Employee Duty Locations

Appendix B--Occupational Series by Occupational Family

Appendix C--Demographics and Union Representation

Appendix D--Performance Management Forms

Appendix E--Project Evaluation

I. Executive Summary

The proposed project was designed by the Army Research Laboratory

with participation and review by the Department of Defense (DOD) and

the Office of Personnel Management (OPM). The purpose of the project is

to achieve the best workforce for the laboratory mission, adjust the

workforce for change, and improve workforce quality. The project

framework addresses all aspects of the human resources life cycle

model. There are six major areas of change: (a) Enhanced hiring

flexibilities; (b) broadbanding; (c) automated classification, (d) a

pay for performance system, (e) modified reduction in force procedures

and (f) expanded developmental opportunities.

ARL managers will exercise cost discipline in the development and

execution of this project, which will be tied to in-house costs and

consistent with the Department of the Army (DA) plan to downsize

laboratories. ARL will manage and control its personnel costs to remain

within established in-house budgets. 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.

Extensive evaluation of the project will be performed by OPM, OSD,

and Department of the Army. The Army has programmed a decision point 5

years into the project for continuance, modification, or rejection of

the demonstration initiatives.

This plan represents a general description of the major

interventions proposed for the demonstration project. Specific

procedures and regulations will provide details on how the personnel

demonstration project will be implemented.

II. Introduction

A. Purpose

The purpose of the project is to demonstrate that the effectiveness

of Department of Defense (DOD) laboratories can be enhanced by allowing

greater managerial control over personnel functions and, at the same

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time, expanding the opportunities available to employees through a more

responsive and flexible personnel system. The quality of DOD

laboratories, their people, and products have been under intense

scrutiny in recent years. The perceived deterioration of quality is

believed to be due, in substantial part, to the erosion of control

which line managers have over their human resources. This demonstration

project, in its entirety, attempts to provide managers, at the lowest

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

achieve a quality laboratory and quality products through an improved

personnel management system.

B. Problems With the Present System

The ARL mission is to execute fundamental and applied research to

provide the Army the key technologies and analytical support necessary

to assure supremacy in future land warfare. The ARL vision is a

laboratory preeminent in key areas of science, engineering, and

analysis relevant to land warfare; a staff widely recognized as

outstanding; a laboratory seen by Army users as essential to their

missions; and an intellectual crossroads for the technical community.

ARL products contribute to the readiness of U.S. forces. To achieve

this vision, ARL must hire and retain enthusiastic, innovative, highly-

educated scientists and engineers to meet mission needs; also required

is the ability to hire and retain dynamic, committed technical,

clerical and administrative support personnel.

ARL finds the current Federal personnel system to be cumbersome,

confusing, and unable to provide the flexibility necessary to respond

to the current mandates of downsizing, restructuring, and possible

closure while trying to maintain a high level of mission excellence.

The present system--a patchwork of laws, regulations, and policies--

often inhibits rather than supports the goals of developing,

recognizing, and retaining the employees needed to realign the

organization with its changing fiscal and production requirements.

The current Civil Service General Schedule (GS) system has 15

grades with 10 levels each and involves lengthy, narrative, individual

position descriptions, which have to be classified by complex, OPM-

mandated position classification standards. Because these standards

have to meet the needs of the entire federal government, they are

frequently obsolete and often not relevant to the needs of ARL.

Distinctions between levels are often not meaningful. Currently,

standards do not provide for a clear progression beyond the full

performance level, especially for scientific/engineering occupations

where career progression through technical as well as managerial

occupational families is important.

Performance management systems require additional emphasis on

continuous, career-long development in a work environment characterized

by an ever-increasing rate of change. Since past performance and/or

longevity are the factors on which pay raises are currently assessed,

there is often no positive correlation between compensation and

performance contributions nor value to the organization. These limited

criteria do not take into account the future needs of the organization

nor other culturally relevant criteria which an organization may wish

to use as incentives.

Finally, current rules on training, retraining and otherwise

developing employee competencies make it difficult to correct skills

imbalances and to prepare current employees for new lines of work to

meet changing mission needs.

C. Changes Required/Expected Benefits

The proposed demonstration project responds to problems in the

classification system with a broadbanding classification system for GS

employees; to problems in the current performance management system

with a pay for performance system; to problems associated with

downsizing with slightly modified reduction in force processes; and to

problems of skills imbalances and rapidly changing missions with an

enhanced developmental opportunities program.

D. Participating Organizations

The Army Research Laboratory (ARL) Director is located in Adelphi,

Maryland. ARL employees assigned to the various laboratory directorates

work at the locations shown in Appendix A.

E. Participating Employees and Union Representation

In determining the scope of the demonstration project, primary

considerations were given to the number and diversity of occupations

within the laboratory and the need for adequate development and testing

of the Pay for Performance (PFP) System. Additionally, current DOD

human resource management design goals and priorities for the entire

civilian workforce were considered. While the intent of this project is

to provide the Laboratory Director with increased control and

accountability for the total workforce, the decision was made to

initially restrict development efforts to General Schedule (GS/GM)

positions.

To this end, the project will cover all ARL civilian employees

under title 5, United States Code except members of the Senior

Executive Service (SES), employees classified in the Scientific and

Professional (ST) pay plan, and Federal Wage System (FWS) employees. A

decision point has been programmed for the end of two and one half

years of the demonstration project to expand coverage to include FWS.

In the event of expansion to FWS employees, full approval of the

expansion plan will be obtained from the Department of the Army, DOD,

and OPM. Civilian Intelligence Personnel Management System (CIPMS)

employees covered by Title X will be included for performance appraisal

purposes only. They will not be eligible for performance payouts

because they are not contributing funds to the pay pools. Performance

awards for CIPMS employees will follow the procedures currently in

place. Department of the Army and Major Subordinate Command centrally-

funded interns are covered by the plan except for reduction in force

(RIF) purposes. They will compete in a separate competitive area in the

event of RIF. The series to be included in the project are identified

in Appendix B.

The American Federation of Government Employees (AFGE), the

National Federation of Federal Employees (NFFE), the International

Association of Machinists and Aerospace Workers (IAM/AW), and the

Fraternal Order of Police (FOP) represent many ARL employees. The

laboratory continues to fulfill its obligation to consult or negotiate

with the unions who represent both professional and nonprofessional

employees in accordance with 5 U.S.C. 4703(f) and 7117. Union

representatives have been separately notified about the project. Of the

more than 2600 employees assigned to the laboratory, approximately 600

are represented by labor unions.

F. Project Design

In December 1993, the ARL Director decided the laboratory needed a

personnel system more like the personnel demonstration project then in

effect at the National Institute for Science and Technology (NIST). A

preliminary plan patterned after the NIST Personnel Demonstration Plan

was developed and shared with the Commanding General, Army Materiel

Command and the Deputy Assistant Secretary of the Army for Research and

[[Page 11648]]

Technology where it received conceptual approval. The ARL Personnel

Demonstration Project Office was then created and became the focal

point for subsequent development efforts. In October 1994, the concept

was briefed to representatives of DOD and other federal agencies. In

November 1994 an Army Personnel Demonstration Team was formed with ARL

designated as the lead. The team's charter was to develop the Army's

Personnel Demonstration Concept Plan. In December 1994, this plan was

approved by the Secretary of the Army.

In January 1995, ARL established a management structure designed to

oversee the development of the demonstration proposal and to

incorporate the workforce in the design efforts. This was accomplished

by appointing an Executive Steering Committee, establishing a Staff

Members Committee and discussing the project with unions. For most of

1995 various revisions were made to the ARL plan, many of which

resulted from further DA and OSD staffing and coordination. In the

Spring of 1996, the plan was ready for joint DOD and OPM review, which

resulted in additional refinements. During this time, feedback was

provided to ARL employees, through town hall meetings, electronic mail

messages and memoranda, union briefings, and peer group review of draft

implementing documents. The opinions and comments of the workforce have

had a significant impact in the overall design of the demonstration

project.

G. Experimentation and Revision

Many aspects of a demonstration project are experimental.

Modifications may be made from time to time as experience is gained,

results are analyzed, and conclusions are reached on how the system is

working. ARL will make minor modifications without further notice;

major changes will be published in the Federal Register.

III. Personnel System Changes

A. Broadbanding

The ARL demonstration project will use a broadbanding approach to

compensation and classification. Such an approach overcomes some of the

problems experienced with the current system. A broadbanding system

will simplify the classification system by reducing the number of

distinctions between levels of work which will facilitate delegating

classification authority and responsibility to line managers.

The proposed broadbanding scheme will replace the current General

Schedule (GS) grading structure. The broadband levels are designed to

enhance pay progression and to allow for more competitive recruitment

of quality candidates at differing rates within the appropriate pay

band level(s). Competitive promotions will be less frequent and

movement through the pay bands will be a more seamless process than

today's procedure. Like the broadbanding systems used at China Lake and

NIST, advancement within each pay band is based upon performance.

Occupations at ARL have been grouped into four occupational

families according to similarities in type of work and customary

requirements for formal training or credentials. The common patterns of

advancement within the occupations as practiced at ARL and in the

private sector were also considered. The current occupations and grades

have been examined, and their characteristics and distribution were

used to develop the four occupational families described below:

1. Engineers and Scientists. This path includes all technical

professional positions, such as engineers, physicists, chemists,

psychologists, metallurgists, mathematicians, and computer scientists.

Ordinarily, specific course work or educational degrees are required

for these occupations. (Pay Plan DB)

2. E&S Technicians. This path consists of positions that directly

support the various scientific and engineering activities of the

laboratory. Employees in these positions are not required to have

college course work. However, practical, quasi-professional training

and skills in the various aspects of electronic, electrical,

mechanical, chemical or computer engineering are generally required.

(Pay Plan DE)

3. Administrative. This occupational family contains specialized

functions in such fields as finance, procurement, personnel, public

information, computing, supply, library science, and management

analysis. Special skills in specific administrative fields or special

degrees are normally required. (Pay Plan DJ)

4. General Support. This occupational family is composed of

positions for which minimal formal education is needed, but for which

special skills, such as office automation, typing, or shorthand may be

required. 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, guards, and mail clerks. (Pay Plan DK)

Each occupational family will be composed of discrete pay bands

(levels) corresponding to recognized advancement within the

occupations. These pay bands will replace grades. They will not be the

same for all occupational families. Each occupational family will be

divided into three to five pay bands, each pay band covering the same

pay range now covered by one or more GS grades. A salary overlap,

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

The salary range of each band begins with step 1 of the lowest grade in

that band and ends with step 10 of the highest grade in the band.

The specific grouping of GS grades into a particular pay band was

based on a careful examination of grade levels that have proven

difficult for managers, employees and classifiers to distinguish;

current performance levels within occupations; and traditional

laboratory training and career development practices.

The proposed pay bands for the occupational families and how they

relate to the current GS framework are shown in Figure 1.

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Administrative Pay Band III includes two full performance levels

because not all work assignments in band III will support movement to

the top of the band. Positions that typically support the higher

salaries perform non-supervisory work associated with formulating

programs and policies with laboratory-wide scope and impact. Other

positions perform supervision of operating level programs in one or

more administrative fields. In order to move beyond the equivalent of

the GS-12 Step 10 salary, duty and work assignments must satisfy the

highest level of the criteria in the classification standard for this

pay band.

Employees will be converted into the occupational family and pay

band which correspond to their GS/GM series and grade. Each employee is

assured an initial place in the system without loss of pay. As the

rates of the General Schedule are increased due to general pay

increases, the minimum and maximum salaries of the pay band levels will

also move up. All employees will receive the general pay increases

given in January of each year. In addition, all employees will be

eligible for future locality pay increases of their geographic area.

(See Section III.E.4. for special provisions for employees in special

rate categories.) Employees can receive additional pay increases based

on their evaluations under the Pay for Performance Management System.

Since pay progression through the pay bands is based on performance,

there will be no scheduled Within-Grade Increases (WGIs) or Quality

Step Increases (QSIs) for employees once the broadbanding system is in

place.

There are several advantages to broadbanding. It is simpler, less

time consuming, and less costly to maintain. In addition, such a system

is more easily understood by managers and employees, is easily

delegated to managers, coincides with recognized occupational families,

and complements the other personnel management aspects of the

demonstration project.

The ARL broadbanding plan expands the broadbanding concept used at

China Lake and NIST by creating Pay Band V of the Engineers and

Scientists occupational family. This pay band is designed for senior

technical managers and senior scientists/engineers.

Current OPM guidelines covering the Senior Executive System and

Scientific and Professional (ST) positions do not fully meet the needs

of ARL. 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 relate to

supervisory and managerial responsibilities. 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.

ARL currently has many division chief positions that have

characteristics of both SES and ST classifications. Most division

chiefs in ARL are responsible for supervising other GS-15 positions,

including branch chiefs, non-supervisory researcher engineers and

scientists and in some cases ST positions. Most division chief

positions are classified at the GS-15 level, but some have been

established at the SES level. ARL management considers the primary

requirement for division chiefs to be knowledge of and expertise in the

specific scientific and technology areas related to the mission of

their divisions. 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 most of the positions as SES have been difficult

because the size of the divisions and their location in the

organization are not competitive with other SES level positions.

Classification of the positions as ST is also not an option because the

supervisory responsibilities inherent in division chief positions

cannot be ignored.

As preeminent scientists and engineers, incumbents of ST positions

are responsible for specific research and development efforts that are

continuing and long range, generally requiring the efforts of a team.

These ST positions 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 ARL to exclude any mention of the team leader responsibilities

in these position descriptions for fear that they will be interpreted

as characteristic of SES

[[Page 11650]]

rather than ST positions. Consequently, ARL has some positions that do

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

The purpose of Pay Band V is to overcome the difficulties

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

senior technical manager (with full supervisory authority) and the

senior scientist/engineer (less than full supervisory authority).

Current GS-15 division chiefs will convert into the demonstration

project at Pay Band IV. After conversion they will be reviewed against

established criteria to determine if they should be reclassified to Pay

Band V. Other positions possibly meeting criteria for classification to

Pay Band V will be reviewed on a case by case basis. The proposed

salary range is the same as currently exists for ST positions (minimum

of 120% of the minimum rate of basic pay for GS-15 with a maximum of

the basic rate of pay established for level IV of the Executive

Schedule). Vacant positions in Pay Band V will be competitively filled

to ensure that selections are made from among the world's preeminent

researchers and technical leaders in the specialty fields. ARL will

capitalize on the efficiencies that can accrue from central recruiting

by continuing to use the expertise of the Army Materiel Command SES

Office as the recruitment agent. Panels will be created to assist in

filling Pay Band V positions. Panel members will be selected from a

pool of current ARL SES members, ST employees and those in Pay Band V,

and an equal number of individuals of equivalent stature from outside

the laboratory to ensure impartiality, breadth of technical expertise,

and a rigorous and demanding review. The panel will apply criteria

developed largely from the current OPM Research Grade Evaluation Guide

for positions exceeding the GS-15 level. The same procedure will be

used for evaluating senior technical manager positions except the

rating criteria will be adjusted to account for the differences in the

positions, such as greater emphasis on technical program management and

supervisory abilities.

The final component of Pay Band V is the management of all Pay Band

V assets. Specifically, this includes authority to classify, create, or

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 V positions

and recruitment/promotion criteria. The specific details regarding the

control and management of Pay Band V 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.

B. Classification

1. Occupational Series

The present General Schedule classification system has 434

occupational series which are divided into 22 occupational families.

ARL currently has positions in 119 series which fall into 20 families.

The occupational series, which frequently provide well-recognized

disciplines with which employees wish to be identified, will be

maintained. This will facilitate movement of personnel into and out of

the proposed demonstration project. New series, established by OPM, may

be added as needed to reflect new occupations in the workforce.

2. Classification Standards

The present system of OPM classification standards will be used for

the identification of proper series and occupational titles of

positions within the demonstration project. Current OPM Position

Classification Standards will not be used to grade positions in this

project. However, the grading criteria in those standards will be used

as a framework to develop new and simplified standards for the purpose

of occupational family and pay band determinations. The objective is to

record the essential criteria for each pay band within each

occupational family by stating the characteristics of the work, the

responsibilities of the position, and the knowledges, skills, and

abilities required. ARL will continue its current practice of using

peer reviews to facilitate the classification process and in some cases

will expand its use to meet the needs of the laboratory.

3. Classification Authority

The Director, ARL will have delegated classification authority and

may, in turn, redelegate this authority to subordinate management

levels, and ultimately to the lowest level of full supervision in each

organizational segment. Personnel specialists will provide ongoing

consultation and guidance to managers and supervisors throughout the

classification process.

4. Position Descriptions

Under the proposed classification system, a new position

description will replace the current DA Form 374, Department of the

Army Job Description. The classification standard for each pay band

will serve as an important component in the new position description,

which will also include position-specific information, and provide data

element information pertinent to the job. Laboratory supervisors will

follow a computer-assisted process to produce position descriptions.

The objectives in developing the new descriptions are to: (1) Simplify

the descriptions and the preparation process through automation; (2)

minimize the amount of writing and time required to create new position

descriptions; and (3) make the position descriptions more useful and

accurate tools for other functions of personnel management, such as

recruitment, reduction in force, performance assessment, and employee

development. Because there is little writing required in the automated

system, supervisory writing style and ability as a hidden consideration

in position classification are eliminated.

5. Specialty Work Codes

Specialty work codes will be used to further differentiate types of

work and the skills and knowledges required for particular positions

within an occupational family and pay band. Each code represents a

specialization or type of work within the occupation. Supervisors will

select appropriate specialty work codes to describe the work of each

employee through the automated classification process.

6. Automated Classification Process

Writing the position description is accomplished by completion of

the following steps using an automated system.

(a) The supervisor enters, by typing free-form, the organizational

location and the employees name. From the menu, the supervisor selects

the appropriate occupational series and title, occupational family, and

pay band corresponding to the level of duties and responsibilities

desired. The user will then select whether the position is a non-

supervisor, team leader or supervisor,

(b) The supervisor enters a brief description of the primary

purpose of the position by typing free-form at the appropriate point.

From a menu, the supervisor will choose statements pertaining to

operation of a motor vehicle; any unusual physical and travel

[[Page 11651]]

requirements; required financial disclosure statements; and the

position's sensitivity. The system will produce standardized statements

of supervisory or team leader duties and responsibilities. The system

will also produce a statement pertaining to positive education

requirements, or their equivalencies, based on the occupational series

selected.

(c) From a menu, the supervisor selects up to three specialty work

codes which are appropriate to the job. The specialty work codes are

subsets of the disciplines and describe particular skills and

knowledges related to the kinds of work performed at ARL.

(d) The supervisor has the option of providing additional position

information by typing free-form at an appropriate point at the end of

the document. This area is to be used when the information addressed by

the purpose of the position, specialty work codes, and functional

classification codes are not completely adequate. The information will

be used primarily to supplement skill and knowledge requirements and to

refine competitive level decisions.

7. Fair Labor Standards Act (FLSA)

Fair Labor Standards Act exemption and nonexemption determinations

will be made consistent with criteria found in 5 CFR (Code of Federal

Regulations) part 551. All employees are covered by the FLSA unless

they meet the criteria for exemption. The duties and responsibilities

outlined in the classification standards for each pay band will be

compared to the FLSA criteria and the tentative conclusions programmed

into the automated classification system so that the system will be

able to generate the FLSA coverage based upon the user's selection of

occupational family, pay band, and supervisory responsibility.

As a general rule, the FLSA status can be matched to occupational

family and pay band. For example, positions classified in Pay Band I of

any occupational family are typically nonexempt, meaning they are

covered by the overtime entitlements prescribed by the FLSA. An

exception to this guideline includes supervisors/ managers who meet the

definitions outlined in the OPM General Schedule Supervisory Guide and

who spend 80% or more of the work week on supervisory duties.

Therefore, supervisors/managers in any of the pay bands who meet the

foregoing criteria are exempt from the FLSA.

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, and the 5 CFR part 551 FLSA

criteria. The final review of the FLSA status will be made by the

Civilian Personnel Operations Center (CPOC) based upon the above-

mentioned material and any supplemental information such as that

contained in established performance objectives.

The automated classification system will annotate the position

description with a preliminary FLSA determination in accordance with

Figure 2 below.

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8. Classification Appeals

An employee may appeal the occupational family, occupational

series, or pay band of his or her position at any time. The employee

may accomplish this by exercising any of the following options: (a) The

employee must formally raise the areas of concern to supervisors in the

immediate chain of command, either verbally or in writing, (b) If the

employee is not satisfied with the supervisory response, the employee

may appeal to the appellate level within DOD or may appeal directly to

OPM, (c) If the employee elects to first appeal to DOD but is not

satisfied with this response, he/she may appeal to the Office of

Personnel Management. Appellate decisions from OPM are final.

The evaluation of a classification appeal is based on the ARL

Personnel Demonstration Project Classification Standards.

C. Pay for Performance

1. Overview

The purpose of the Pay For Performance (PFP) System is to provide

an effective, efficient, and flexible method for assessing,

compensating, and managing the laboratory workforce. It is essential

for the development of a highly productive workforce and to provide

management, at the lowest practical level, the authority, control, and

flexibility needed to achieve a quality laboratory and quality

products. PFP allows for more employee involvement in the assessment

process, increases communication between supervisor and employee,

promotes a clear accountability of performance, facilitates employee

career progression, provides an understandable basis for salary

changes, and delinks awards from the annual performance appraisal

process. The funds previously allocated for performance-based awards

will be reserved for distribution under a separate laboratory awards

program.

PFP creates a method to more directly link pay and performance. The

system combines goal setting, tied to corporate objectives, with a

letter grading system. The performance evaluations made under the

demonstration project will ensure that top performers receive pay

increases commensurate with their achievements. The PFP System uses a

[[Page 11652]]

four level summary pattern (Pattern E) under 5 CFR 430.208(d) where a

rating of C is equivalent to fully successful.

Employees within the laboratory will be placed into pay pools. Base

pay adjustment decisions (i.e., decisions regarding the amounts of

salary increase) are based on the relationship between performance

ratings and present salaries. The maximum base pay rate under this

demonstration project will be the unadjusted base pay rate of GS-15/

Step 10, except for employees in Pay Band V of the E&S Occupational

Family. In this case, the maximum rate of base pay will be the basic

rate of pay for level IV of the Executive Schedule.

Cost discipline is assured within each pay pool by limiting the

total base pay increases to the funds available in the base pay fund in

the pay pool, based on what would have been available in the General

Schedule system from within-grade increases, quality step increases and

within-band promotions. The ARL Director may adjust the amount of funds

assigned to each pay pool as necessary to ensure equity and to meet

unusual circumstances. No changes will be made to locality pay under

the demonstration project and all employees continue to receive general

pay increases.

The PFP system being proposed differs from the current system in

that all the supervisors in a pay pool will meet to reconcile the

scores given to each employee in the pay pool, with the purpose being

to reach consensus on the type of achievements that warrant particular

scores. After this reconciliation process is completed, final letter

grades are assigned and payout proceeds according to each employee's

final letter rating, score, and current salary.

The PFP System eliminates within-grade increases, quality step

increases, in band promotions and awards, and replaces them with pay

for performance payouts described above. Other awards such as special

acts will continue to be awarded. The new system also provides the

ability to give bonuses to employees who are at the top of the range in

their pay band. Bonuses differ from pay increases in that they are not

added to base salary but rather are given as a lump sum payment.

Interns in recognized DA career programs will be appraised semi-

annually until they complete their internships. The second appraisal in

each annual cycle will be considered the rating of record.

2. The PFP Assessment Process

At the beginning of the assessment cycle, the employee and rater

will collaborate on the development of the employee's performance

objectives, designation of the performance elements and which of these

elements are critical, and their associated weights. An objective is

defined as a statement of specific job responsibilities expected of the

employee during the rating period. These are to be based on the work

unit's mission and goals and should be consistent with the employee's

job description. Performance objectives may be modified and/or changed

as appropriate during the rating cycle. As a general rule, performance

objectives should only be changed when circumstances outside the

employee's control prevent or hamper the accomplishment of the original

objectives. It is also appropriate to change objectives when mission or

workload changes occur. Performance objectives will be tailored to each

individual employee. Use of generic one size fits all objectives will

be avoided.

The supervisor and employee will discuss the performance

objectives, which elements are critical, and what weight each carries

in an attempt to reach agreement whenever possible. Disagreements will

be handled through the normal chain of command. Management retains the

right to establish objectives, identify which elements are critical,

and their relative weights. Employees retain their right to grieve any

element they believe is inappropriate through Alternative Dispute

Resolution processes or grievance procedures. It is encouraged that

disagreements be resolved at the beginning of the appraisal period.

How well work objectives are performed will be measured by a series

of weighted performance elements. Performance elements are defined as

generic critical attributes of job performance that are of sufficient

importance that performance below the minimum standard requires

remedial action and may be the basis for removing the employee from the

position. Specific information on the interrelationships between

objectives and elements will be included in the implementing procedures

for this plan.

Eight elements have been developed for evaluating the yearly

performance of all laboratory personnel covered by this initiative:

Technical Competence, Cooperation, Communication, Management of Time

and Resources, Customer Relations, Technology Transition, Management/

Leadership, and Supervision/EEO.

All employees will be rated against the first five performance

elements. Element 6 is optional and is intended for those positions

involving technology transition. Element 7 is optional and is intended

for non-supervisory team leaders or program managers. Elements 7 and 8

are required for all supervisory positions. These eight elements are

described below.

(1) Technical Competence. Exhibits and maintains current technical

knowledge, skills, and abilities to produce timely and quality work

with the appropriate level of supervision. Makes prompt, technically

sound decisions and recommendations that add value to mission

priorities and needs. For appropriate occupational families, seeks and

accepts developmental and/or special assignments. Adaptive to

technological/organizational change. (Weight range: 15 to 50)

(2) Cooperation. Accepts personal responsibility for assigned

tasks. Considerate of others views and open to compromise on areas of

difference. Exercises tact and diplomacy and maintains effective

relationships, particularly in immediate work environment and teaming

situations. Readily/willingly gives assistance. Shows appropriate

respect and courtesy. (Weight Range: 5 to 25)

(3) Communication. Provides or exchanges oral/written ideas and

information in a manner that is timely, accurate and easily understood.

Listens effectively so that resultant actions show understanding of

what was said. Coordinates so that all relevant individuals and

functions are included in, and informed of, decisions and actions.

(Weight Range: 5 to 25)

(4) Management of Time and Resources. Meets schedules and

deadlines, and accomplishes work in order of priority; generates and

accepts new ideas and methods for increasing work efficiency;

effectively utilizes and properly controls available resources;

supports organization's resource development and conservation goals.

(Weight Range: 15 to 50)

(5) Customer Relations. Demonstrates care for customers through

respectful, courteous, reliable and conscientious actions. Seeks out,

develops and/or maintains solid working relationships with customers to

identify their needs, quantifies those needs, and develops practical

solutions. Keeps customer informed. Within the scope of job

responsibility, seeks out and develops new programs and/or reimbursable

customer work. (Weight Range: 10 to 50)

(6) Technology Transition. Seeks out and incorporates outside

technology within internal projects. Implements partnerships for

transition or transfer of technology to other internal working groups,

other government agencies, and/

[[Page 11653]]

or commercial activities. (Weight Range: 5 to 50)

(7) Management/Leadership. Actively furthers the mission of the

organization. As appropriate, participates in the development and

implementation of strategic and operational plans of the organization.

Exercises leadership skills within the environment. Mentors junior

personnel in career development, technical competence, and

interpersonal skills. Exercises appropriate responsibility for

positions assigned. (Weight Range: 5 to 50)

(8) Supervision/EEO. Works toward recruiting, developing,

motivating, and retaining quality employees; initiates timely/

appropriate personnel actions, applies EEO/merit principles;

communicates mission and organizational goals; by example, creates a

positive, safe, and challenging work environment; distributes work and

empowers employees. (Weight Range: 25 to 50)

The performance element titled Technical Competence is a mandatory

critical element for all employees. In addition, all supervisors must

be evaluated against the element titled Supervision/EEO and this must

be identified as critical.

Other elements may be identified as critical as agreed upon between

the rater and the employee. Generally any performance element that has

been given a weight of 25 or higher should be identified as critical.

Some elements weighted less than 25 (e.g., Communication or

Cooperation) may also be critical; for instance, those that are

considered so important to a particular job that failure to perform at

an acceptable level would result in an overall performance evaluation

of unsatisfactory. Weights on elements must add up to 100.

Appendix D contains the Performance Objective Worksheet and the

Performance Appraisal form accompanied by a guidance form entitled,

Point Ranges and Performance Element Benchmarks.

Pay pool managers will review objectives, critical element

designations and weights prior to their implementation to ensure these

are reasonable and fair and in keeping with expectations for each

employee. As a general rule, essentially identical positions will have

the same critical elements and the same weights.

The rater will provide periodic feedback to the employee on how

well he/she is performing. If the rater judges that the employee is not

performing at an acceptable level on one or more elements, the rater

must alert the employee and document the problem. This feedback will be

provided any time during the rating cycle especially if there is a

problem. A mid-point counseling session is required. Deficiencies

identified will be accompanied by a plan to correct them.

Employees will provide information on their accomplishments to the

rater at both the mid-point and end of the rating period, similar to

the current Army process. Employees may self-rate their performance

elements and/or they may solicit input from team members, customers,

peers, supervisors in other units, subordinates and other sources which

will permit the rater to fully evaluate the contributions during the

rating period. As a minimum, employees will provide the rater with an

itemized list of their accomplishments during the rating period.

Employees may also provide information and input to the rater's

supervisor for consideration in the supervisor's appraisal. This

material may go directly to the rater's supervisor but a copy must be

furnished to the rater.

At the end of the rating period, the rater will score each of the

performance elements by assigning a value between 0 and 100 percent of

the weighted value assigned to each of the elements. The rater arrives

at this score by referring to the performance element benchmarks found

on the reverse of the performance appraisal form. The benchmark

performance standards are written so they describe performance at 100

percent of the element; 70 percent; 50 percent and the Unsatisfactory

level of performance. Using these benchmarks, the rater decides where

on a continuum the performance of the employee fits and assigns a point

value according to that determination. The chart to the right of the

performance element benchmarks will be used to assign the specific

point value. Scores will be summed and a letter rating assigned; i.e.,

85-100 = A, 70-84 = B, 50-69 = C. This rating will become the rating of

record. A total score of 49 or below will result in an unsatisfactory

rating. Failure to achieve at the 50% level of any critical element

will also result in an overall unsatisfactory rating.

The letter ratings will be used to determine pay or bonus values

and to award additional RIF retention years as shown in Figure 3 below.

BILLING CODE 6325-01-P

[GRAPHIC] [TIFF OMITTED] TN12MR97.058

BILLING CODE 6325-01-C

After a rating has been assigned, the rater recommends the number

of shares that should be granted. This decision is based on an

evaluation of the employee's current salary and level of performance

(e.g., high B or low A) in

[[Page 11654]]

comparison to similarly situated employees within the pay pool and

overall funding availability. For example, an employee who receives a

score of 84 and a final rating of B, but whose current salary is at the

lower end of his/her pay band might receive the maximum number of

shares (3) permitted for a B rating. In contrast, an employee who

received a score of 85 which warrants a final rating of A, but whose

salary is comparable to or above similar positions in the pay pool

might receive 3 rather than 4 shares. A third example is that an

employee who receives a score of 84 might receive the maximum number of

shares based on the fact that it is a very high B or one point away

from an A. The methods available for determining shares will allow ARL

managers to adjust basic pay by considering differences in performance

levels among employees in terms of comparability within ARL and the pay

pool for similarly situated employees.

Upon approval of this plan, implementing procedures and regulations

will provide details on this process to employees and supervisors.

3. Performance Which Fails To Meet Expectations

a. Continuing Performance Evaluation

Informal employee performance reviews will be a continuous process

so that corrective action, to include a Performance Improvement Plan

(PIP), may be taken at any time during the rating cycle. At least one

review will be documented as a formal progress review. Whenever a

supervisor recognizes that an employee's performance is at a level that

could put him/her in danger of receiving an unsatisfactory rating, the

supervisor will discuss the situation with the employee in an effort to

identify the possible reasons for the poor performance.

b. End of Rating Cycle Performance Evaluation

Employee performance will be formally reviewed at the end of the

rating cycle. If an employee's rating score is below 50 points, or if

the employee fails a critical element, the employee will receive an

unsatisfactory rating. Immediately upon assigning an unsatisfactory

rating, the supervisor will take steps to correct the problem.

c. Improving Performance

In recognition that personality conflicts sometimes occur between a

supervisor and an employee, or that an employee might be better suited

to another type of work, the supervisor and employee may explore a

temporary assignment to another unit in the organization. The

supervisor is under no obligation to explore this option prior to

taking more formal action.

If the temporary assignment is not possible or has not worked out,

and the employee continues to perform at an unsatisfactory level or has

received an unsatisfactory rating, written notification will be

provided of the unsatisfactory performance in the element(s) at issue,

and an opportunity to improve will be structured in a Performance

Improvement Plan (PIP). The supervisor will identify the items/actions

which need to be corrected or improved; will outline required time

frames for such improvement; and will provide the employee with any

available assistance, references, training and the like which might

facilitate needed improvements. Progress will be intensively monitored

during this PIP period; all counseling sessions will be documented.

If the PIP results in a score of 50 or above and/or the critical

element which was failed is now acceptable, no further action is

necessary. If the PIP does not improve performance to an acceptable

level, the supervisor may propose to institute a Last Chance Agreement

(LCA) with the employee. A Last Chance Agreement stipulates that if

performance does not rise to the required level within a specified time

frame the employee will be changed to a lower pay band, reduced in

salary, or released from Federal service. The employee agrees to this

last chance arrangement with the understanding that there are no

grievance or appeal rights if the adverse action eventually has to be

taken. The decision to enter into a last chance agreement is entirely

voluntary on the part of the employee.

If the PIP does not improve performance to the acceptable level and

the employee elects not to enter into the LCA, the supervisor will take

the appropriate follow-on action, such as change to lower pay band/

occupational family, reduction in pay within the same pay band, or

removal, as indicated by the circumstances of the situation. For the

most part, employees with an unsatisfactory rating will not be

permitted to remain at their current pay band or salary. Reductions in

salary within the same pay band or changes to a lower pay band will be

accomplished with a minimum of a 5% decrease in employee base pay. If

the employee is reduced to a lower pay band, the salary will not exceed

the highest level in that pay band.

4. Pay Pools

Pay pool structure is under the authority of the laboratory

director. A pay pool must be large enough to constitute a reasonable

statistical sample, i.e., 50 or more. The pay pool manager (for

instance, a directorate or division chief) is delegated yearly pay

adjustment authority. However, a pay pool manager's final decision may

still be subject to higher management review. Supervisors will be

placed in a pay pool separate from their employees.

The pay pool manager makes final decisions on pay increases and/or

bonuses to individuals based on rater recommendation, the final score

and letter rating, the value of the pay pool resources available, and

the individual's current salary within a given pay band. Pay pool

managers will not prescribe a distribution of rating levels. A pay pool

manager may request approval from the Personnel Management Board (PMB)

(described in VIII.C.) or its designee to grant a pay increase to an

employee that is higher than the compensation formula for that

employee. Examples of employees who might warrant such consideration

are those making extraordinary achievements or those serving as

interns.

The amount of money available for performance payouts is divided

into two components. The amount of money which can be used for salary

increases within a pool is based upon the money that would have been

available for within-grade increases, quality step increases, and grade

level promotions that are now within the band. In the first year of the

project, this amount will be set at 2.4% of the total of base salaries

in the pay pool. The amount of money to be used for bonus payments is

separately funded within the constraints of the overall awards budget.

In the first year of the project, this amount will be set at 1.1% of

the total of base salaries in the pay pool which reflects the funds

previously available for performance awards. The sum of these two

factors is referred to as the pay pool percentage factor. The Personnel

Management Board will annually review and adjust the pay pool funding

formula, to ensure cost discipline over the life of the demonstration

project.

Performance pay increases (i.e., base pay increases) will not be

granted to employees at the top of their pay band or in a pay retention

status. In these cases, payouts earned as a function of performance

will be paid as a bonus. In addition, a portion of the projected pay

increase may be paid as bonus instead of base pay if required to keep

the base pay portion of the pay pool from

[[Page 11655]]

exceeding its maximum value (initially 2.4%).

In making the annual performance payouts under the PFP system, it

will be necessary to determine the amount of that year's pay pool and

share value. As explained above, the amount of the pay pool is the pay

pool percentage (initially 3.5 percent) multiplied by the sum of the

combined base salaries of covered employees. The share value will be

calculated so that a pay pool manager will not exceed the resources

that are available in the pay pool. The value of a share cannot be

exactly determined until the rating and reconciliation process

described below is complete. The estimated share value is about 1% of

salary, but inflated ratings (if they occur) will reduce the value of

the share. (Conversely, lower average ratings will increase the value

of a share.) The share value is expressed as a fraction of base salary.

It is computed by dividing the amount of the pay pool by the sum of

each pay pool member's salary multiplied by his/her earned shares, or

share value = (pay pool value)/(sum of (salary * shares) for each

member).

Each individual's performance payout is calculated by multiplying

the individual's base salary by the total value of his/her earned

shares expressed as a percentage of base salary, or

Individual performance payout = salary * (earned shares * share value).

In summary, an individual's performance payout is computed as

follows:

Individual performance payout = SALi * Ni * SV,

where: SV = share value = (pay pool value) / SUM (SALk * Nk); k = 1 to

n

pay pool value = (pay pool percentage factor) * SUM (SALk), k = 1 to n

n = number of employees in pay pool

i = an individual employee

N = Number of shares earned by an employee based on his/her performance

rating (0 to 4)

SAL = An individual's base salary and

SUM = The summation of the entities in parentheses over the range

indicated.

This formula ensures that a share represents a fixed percentage

salary increase for all employees in a pay pool.

After the payout and share value calculations have been completed,

the pay pool manager must calculate the proportion of payouts to be

paid as base pay vs bonus. If base pay increases would exceed the

authorized percentage, shares must be paid out as base pay increases up

to the limit, and the remainder paid as a bonus. This base/bonus

proportion will be constant for all uncapped employees. This process

will preserve the principle that all shares maintain equal (percentage)

value, and will ensure that all of the allocated funds are disbursed as

intended.

Pay pool managers will establish and chair a panel to review

supervisors preliminary ratings and make any necessary adjustments. The

panel will comprise all rating supervisors below the pay pool manager.

The reconciliation process gives raters the opportunity to verify that

their preliminary evaluations and approach to scoring conform with that

of other raters within the pay pool and assures that performance

assessments of employees are comparable and equitable across

organizational lines. In this step, each employee's preliminary

performance element scores are compared and through discussion and

consensus building, final ratings are determined. The reconciliation

process is aimed at determining the relative worth of employee

accomplishments.

The rationale behind reconciliation is that supervisors within a

pay pool will reach a consensus on the types of achievements that

warrant particular scores. Each panel will develop operating procedures

that will provide for fair and equitable conclusions. If the panel

cannot reach consensus, the pay pool manager makes final decisions.

A midpoint principle will be used to determine performance pay

increases. This principle is that employees must receive a B rating or

higher in order to cross the midpoint of the pay band range and, once

the midpoint is crossed, the employee must receive a B or better rating

in order to receive a base pay increase. This applies to all employees

in every occupational family and pay band. Any amount of an employee's

performance payout not paid in the form of a base pay increase because

of the midpoint principle will be paid as a bonus.

5. Awards

While not linked to the pay for performance system, awards will

continue to be given for special acts and other categories as they

occur. Awards may include, but are not limited to, special acts,

patents, suggestions, on-the-spot, and time-off.

In an effort to foster and encourage team work among its employees,

ARL often gives group awards for special acts or significant

achievement. Under the demonstration project, if such an award is given

a team may elect to distribute the award among themselves. Thus, a team

leader or supervisor may allocate a sum of money to a team for

outstanding completion of a special task, and the team may decide the

individual distribution of the total dollars among themselves.

D. Hiring and Appointment Authorities

1. Qualifications

The qualifications required for placement into a position in a pay

band within an occupational family will be determined using the OPM

Qualification Standards Handbook for General Schedule Positions. Since

the pay bands are anchored to the General Schedule grade levels, the

minimum qualification requirements for a position will be the

requirements corresponding to the lowest General Schedule grade

incorporated into that pay band. For example, the minimum eligibility

requirements for a position in Pay Band II in the Engineers and

Scientist Occupational Family will be the GS-05 qualification

requirements for the series.

Selective factors may be established for a position in accordance

with the OPM Qualification Standards Handbook when determined to be

critical to successful job performance. These factors become part of

the minimum requirements for the position and applicants must meet them

in order to be eligible. If used, selective factors will be clearly

stated as part of the qualification requirements in vacancy

announcements and recruiting bulletins.

2. Competitive Examining

Current OPM regulations state that appointment registers will list

the names of eligibles in accordance with their numerical ratings.

However, preference eligibles with a compensable service-connected

disability of 10 percent or more shall be entered at the top of the

register ahead of all others unless the register is for professional

and scientific positions GS-9 and above.

ARL professional and scientific positions in the demonstration

project have been placed into two occupational families, the Engineers

and Scientists Occupational Family and the Administrative Occupational

Family. The broadbanding concept adopted by ARL groups scientific

positions in grades GS-5 through GS-11 into one pay band (DB-II).

Similarly, GS-5 through GS-10 positions in the Administrative

Occupational Family (DJ-II) have been grouped into one pay band.

As a result of the ARL broadbanding method, the exception

authorized by OPM for professional and scientific positions will not be

used for DB-II and

[[Page 11656]]

DJ-II pay bands and will only be used for the bands that include

professional and scientific positions at GS-12 and above. Otherwise,

appointment registers for all positions, regardless of occupational

family, will follow the normal practice for listing eligibles in order

of their numerical ratings and observing the existing rules for

preference eligibles.

3. Revisions to Term Appointments

The laboratory conducts many research and development projects that

range from three to six years. The current four-year limitation on term

appointments imposes a burden on the laboratory 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 laboratory's ability to serve its customers.

Under the demonstration project, ARL 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 one year but

not more than five years when the need for an 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 five, rather than four years. The ARL Director

is authorized to extend a term appointment one 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 (1) have been selected for the term

position under competitive procedures, with the announcement

specifically stating that the individual(s) selected for the term

position(s) may be eligible for conversion to career-conditional

appointment at a later date; (2) served two years of continuous service

in the term position; (3) be selected under merit promotion procedures

for the permanent position and (4) have a current rating of B or

better.

Employees serving under regular 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 rating of B or better and are selected under merit promotion

procedures for the permanent position after having completed two years

of continuous service. Time served in 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.

4. Voluntary Emeritus Corps

Under the demonstration project, the laboratory director will have

the authority to offer retired or separated employees voluntary

positions in the laboratory. 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 Corps

will ensure continued quality research while reducing the overall

salary line by allowing higher paid employees to accept retirement

incentives with the opportunity to retain a presence in the scientific

and technical communities. The program will be beneficial during

manpower reductions as senior scientists, engineers, and technicians

accept retirement and return to provide a continuing source of

corporate knowledge and valuable on-the-job training or mentoring to

less-experienced employees.

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

recommended by laboratory managers to the directorate chief. Everyone

who applies is not entitled to an emeritus position. The directorate

chief must clearly document the decision process for each applicant

(whether accepted or rejected) and retain the documentation throughout

the assignment. Documentation of rejections will be maintained for two

years.

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 break or

mandatory waiting period.

Voluntary Emeritus Corps volunteers will not be permitted to

monitor contracts on behalf of the government. The volunteers may be

required to submit a financial disclosure form annually and will not be

permitted to participate on any contracts 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, the

directorate chief, and the Civilian Personnel Operations Center. 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, 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,

(c) Volunteer's work schedule,

(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 and experience,

(g) A statement providing that 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

corps,

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

ten working days written notice, and

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

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

volunteer is a member of the emeritus corps).

5. Extended Probationary Period

A new employee appointed to a nonsupervisory/non-managerial

position in the Engineers and Scientists occupational family must

demonstrate adequate contribution during all cycles of a research

effort for a laboratory manager to render a thorough evaluation. The

current one year probationary period will be extended to three years

for all newly hired permanent career-conditional employees appointed to

positions in that occupational family. The purpose of extending the

probationary period is to allow supervisors an adequate period of time

to fully evaluate an employee's contributions and conduct. The three

year probationary period will apply only to new hires subject to a

probationary period.

If a probationary employee's performance is determined to be

satisfactory at a point prior to the end of the three year probationary

period, a supervisor has the option of ending the

[[Page 11657]]

probationary period at an earlier date, but not before the employee has

completed one year of continuous service. If the probationary period

for an employee is terminated before the end of the three year period,

the supervisor will develop written rationale for his/her decision and

will elevate it at least one level for review prior to implementing the

action.

All other existing provisions pertaining to probationary periods

are retained, including limited notice and appeal rights and crediting

prior service. Prior Federal civilian service (including NAF service

and service in temporary or term positions) counts toward completion of

probation when the service is in the Department of Army, is in the same

line of work, and contains or is followed by no more than a single

break in service that does not exceed 30 calendar days.

In the case of modified-term employees who are converted to

permanent status, the time served under the term appointment counts

toward the required probationary period as long as it is in the same

line of work. If the permanent position is in a different line of work,

the full three-year probationary requirement applies.

6. Supervisory Probationary Period

Supervisory probationary periods will be made consistent with 5 CFR

part 315, subchapter 315.901 except references to grade will be

indicated as pay band. New supervisors will be required to complete a

one year probationary period for the initial appointment to a

supervisory position. If, during the probationary period, the decision

is made to return the employee to a nonsupervisory position for reasons

solely related to supervisory performance, the employee will be

returned to a comparable position of no lower pay band and pay than the

position from which promoted. Pay will not exceed the maximum rate of

the lower pay band.

New supervisors who are hired into the E&S occupational family will

only serve under a single one-year probationary period and are not

subject to the three-year probationary period described above. The

reason for this is that the position for which they were hired is

primarily supervisory in nature and performance can adequately be

measured in the one year probationary period.

E. Internal Placement and Pay Setting

1. 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. Supervisors may consider promoting employees at any time since

promotions are not tied to the pay for performance system. Progression

within a pay band is based upon performance pay increases; as such,

these actions are not considered promotions and are not subject to the

provisions of this section.

Promotions will be processed under competitive procedures in

accordance with merit principles and requirements and the local merit

promotion plan. 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.

(c) A position change permitted by reduction in force procedures.

(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) Reclassification to include impact of person in the job

promotions.

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

classification error or the issuance of a new classification standard.

(h) Consideration of a candidate not given proper consideration in

a competitive promotion action.

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

to a 6% increase in base pay or the lowest level in the pay band to

which promoted, whichever is greater. The maximum amount of pay

increase upon promotion will not exceed $5,000. However, on a case-by-

case basis, the Personnel Management Board will approve requests for

promotion beyond the $5,000 limit. Highest previous rate also may be

considered in fixing pay in accordance with the laboratory's pay fixing

policies.

2. Demotions

A demotion is a placement into a lower pay band within the same

occupational family, or placement into a pay band in a different

occupational family with a lower salary. Demotions may be for cause

(performance or conduct) or for reasons other than cause (e.g., erosion

of duties, reclassification of duties to a lower pay band, application

under competitive announcements or at the employee's request, or

placement actions resulting from reduction in force procedures).

Employees demoted for cause are not entitled to pay retention.

Employees demoted for reasons other than cause may be entitled to pay

retention in accordance with the laboratory's pay fixing policies.

3. Pay Fixing Policies and Procedures

The Director, ARL, will establish pay administration policies which

conform with basic governmental pay fixing policy; however, the ARL

policies will be exempt from Army Regulations or local pay fixing

policies, except where negotiated agreements prevail.

Highest previous rate (HPR) will be considered in placement actions

for which authorized. Use of HPR will be at the supervisor's

discretion. The pay retention provisions of 5 U.S.C. 5363 and 5 CFR

536.101 will apply to this plan except where waived or modified as

specified in the waiver section. Pay retention may also be granted by

the ARL Director to employees who meet general eligibility

requirements, but do not have specific entitlement by law, provided not

specifically excluded.

An employee's total monetary compensation paid in a calendar year

may not exceed the basic pay of level I of the Executive Schedule

consistent with 5 U.S.C. 5307 and 5 CFR part 530 subpart B.

As a general rule, pay will be set at the lowest level in a pay

band. Appointments made above the minimum level will be based upon

superior qualifications of the candidate. A candidate appointed toward

the higher end of a pay band should have qualifications approaching the

lowest General Schedule grade incorporated into the next higher pay

band. For example, a person appointed at the higher end of Pay Band II

in the Engineers and Scientist occupational family would have

education, experience, or a combination of the two approaching the

qualifications of the GS-12 level, which is the lowest General Schedule

grade incorporated into Pay Band III. Appointments above the minimum of

the pay band will be approved at the directorate level.

Directorates may make full use of recruitment and retention

bonuses, and relocation payments as currently provided for by OPM.

[[Page 11658]]

When a temporary promotion is terminated, the employee's pay

entitlements will be redetermined based on the employee's position of

record, with appropriate adjustments to reflect pay events during the

temporary promotion, subject to the specific policies and rules

established by ARL. In no case may those adjustments increase the pay

for the position of record beyond the applicable pay range maximum

rate.

4. Staffing Supplements

Employees assigned to occupational series and geographic areas

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

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

a special rate that exceeds the maximum GS locality rate for the banded

grades. The staffing supplement is added to the base pay, much like

locality rates are added 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 employee's old GS adjusted rate (the higher of 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 GS adjusted rate.

Simplified, the formula is this:

Staffing Supplement = demonstration base rate x (staffing factor -1)

Salary upon conversion = demonstration base rate + staffing supplement

(sum will equal existing rate)

[GRAPHIC] [TIFF OMITTED] TN12MR97.055

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:

Staffing Factor = $51,295 $46,523 = 1.1026

Demonstration Base Rate = $42,944 1.1026 = $ 38,948

Then to determine the staffing supplement, multiply the

demonstration base by the staffing factor minus 1.

Staffing Supplement = $38,948 X .1026 = $ 3,996

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 project, the demonstration base rate is derived

by dividing the employee's former GS adjusted rate (the higher of

locality rate or special rate) by the applicable locality pay factor

(for example, in the Washington-Baltimore area, it is currently

1.0711). The employee's demonstration locality-adjusted rate will equal

the employee's former GS adjusted rate.

The annual pay adjustment for employees in special rate occupations

will require recomputation of the staffing supplement. Employees in

special rate occupations remain entitled to an underlying locality

rate, which may over time supersede the need for a staffing supplement.

If OPM discontinues or decreases a special rate schedule, 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, severance pay, and advances in pay. It will also be used

to compute worker's compensation payments and lump-sum payments for

accrued and accumulated annual leave.

5. Simplified Assignment Process

Today's environment of downsizing and workforce transition mandates

that ARL have increased flexibility to assign individuals. Broadbanding

can be used to address this need. As a result of the assignment to a

more general position description, the organization will have increased

flexibility to assign an employee without a pay change consistent with

the needs of the organization, and the individual's qualifications and

rank or level. Subsequent assignments to projects, tasks, or functions

anywhere within the organization requiring the same level and area of

expertise, and qualifications would not constitute an assignment

outside the scope or coverage of the current position description.

Such assignments within the coverage of the generic descriptions

are accomplished without the need to process a personnel action. For

instance, a technical expert can be assigned to any project, task, or

function requiring similar technical expertise. This flexibility allows

a broader latitude in assignments and further streamlines the

administrative process and system.

6. Details

Under this plan employees may be detailed to a position in the same

or lower pay band (or its equivalent in a different occupational

family) for up to one year. Details may be implemented by submitting

one SF 52-B to cover the one year period. As in the current system,

details to duties in a higher pay band for more than 180 days will be

implemented using competitive procedures.

[[Page 11659]]

F. Employee Development

1. Expanded Development Opportunities

ARL 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.

The ARL Expanded Developmental Opportunities Program, to include

sabbaticals, will cover all demonstration project employees. One

developmental opportunity for a sabbatical 3-12 months in duration may

be granted to an employee in any 10-year period. The developmental

opportunity period will not result in loss of (or reduction in) pay,

leave to which the employee is otherwise entitled, or credit for time

of service. Employees will be eligible after completion of seven years

of Federal service. Each opportunity must result in a product, service,

report, or study that will benefit the ARL mission as well as increase

the employee's individual effectiveness. Various learning or

developmental experiences may be considered, such as advanced academic

teaching, study, or research; self-directed or guided study; and on-

the-job work experience with a public, private commercial, or private

nonprofit organization. The positions of employees on expanded

developmental opportunities may be backfilled (i.e., with temporarily

promoted employees or with term employees). However, that position or

its equivalent must be made available to the employee returning from

the expanded development opportunity.

2. Critical Skills Training

Training is an essential component of an organization that requires

continuous acquisition of advanced and specialized knowledge. Degree

training in the academic environment of 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 not permitted for non-shortage

occupations involving critical skills.

ARL proposes to expand the authority to provide degree or

certificate payment for purposes of meeting critical skill

requirements, to ensure continuous acquisition of advanced specialized

knowledge essential to the organization, and to recruit and retain

personnel critical to the present and future requirements of the

organization. Degree or certificate payment may not be authorized where

it would result in a tax liability for the employee without the

employee's express and written consent. Any variance from this policy

must be rigorously determined and documented. In addition, this

proposal will be implemented consistent with 5 U.S.C. 4107(b)(2).

3. Appraisals for Employees on Expanded Development Opportunities

Training

Expanded development opportunities generally fall into two general

categories: classroom and developmental (on-the-job training).

Developmental assignments should be treated as any other temporary

assignment that continues for 120 days or more. A performance plan is

established and the incumbent receives a special or annual rating upon

completion. Assignments that involve classroom work are covered by one

of two options. The first is to render a rating as soon as the employee

returns to the position and completes 120 days under a performance

plan. The second is to render a rating for the classroom performance.

Procedures for this option will follow those currently in place for

Department of Army's Long Term Training (LTT) Program. Employees

availing themselves of expanded development opportunities are eligible

to be considered for pay for performance increases as appropriate.

4. Employee Development Panels

Each directorate (or equivalent organizational unit) will create an

Employee Development Panel which will be chaired by the directorate

chief. The purpose of the panel is to review, evaluate, and make

decisions on applications for any expanded developmental opportunities

described in this plan or in related Human Resources Development Plans.

Because opportunities for training and development will be limited by

budgetary considerations, the panel must determine which training is

most important to the successful accomplishment of the mission, both

present and future.

The directorate chief will oversee panel meetings, ensuring that

all panel member comments and recommendations receive equal

consideration in the selection process and that decisions are made

based on majority vote. The directorate chief will provide written

feedback to each person who has applied, including reasons for

nonselection when that is the panel's decision. Panels will elicit

feedback from mentors and mentees and will put these before the panel

for consideration. Applicants must show a direct relationship of their

training request to the ARL mission and will outline what return on

investment will be realized if the training is approved. Supervisors

will be asked to provide their recommendations to the panel and will

include a statement concerning the applicant's potential and his/her

ability to apply the knowledges gained. Once selected, the employee

must sign a service obligation agreement which provides for serving in

the government three times the length of the training period. If he/she

voluntarily leaves the government before the service obligation is

completed the employee is liable for repayment.

G. Reduction In Force (RIF)

When an employee in the ARL Demonstration Project is faced with

separation or downgrading due to lack of work, shortage of funds,

reorganization, insufficient personnel ceiling, the exercise of

reemployment or restoration rights, or furlough for more than 30

calendar days or more than 22 discontinuous days, RIF procedures will

be used.

The procedures in 5 CFR part 351 and OPM RIF regulations will be

followed with slight modifications pertaining to competitive areas,

broadbanding, assignment rights, and calculation of adjusted service

computation date.

A separate competitive area will be established for each

occupational family; within each occupational family, separate

competitive areas will be established by duty location. Within each

competitive area, competitive levels will be established consisting of

all positions in the same occupational series and pay band which are

similar enough in duties, qualifications, and working conditions that

the incumbent of one position can perform successfully the duties of

any other position in the competitive level without unduly interrupting

the work program.

An employee may displace another employee by bump or retreat to one

band below the employee's existing band. A preference eligible with a

compensable service-connected disability of 30% or more may retreat to

positions two bands (or equivalent to five grades) below his/her

current band.

Reductions in force are accomplished using the existing procedures,

the retention factors of tenure, veterans preference, length of

service, and performance ratings, in that order. However, the

additional RIF service credit for performance based on the last three

ratings of record during the

[[Page 11660]]

preceding four years will be applied as follows: Rating A adds 10

years, Rating B adds 7 years, Rating C adds 3 years, and Rating U (or

an overall rating of unsatisfactory) adds no credit for retention. The

additional years of service credit are added, not averaged. Ratings

given under non-demonstration systems will be converted to the

demonstration rating scheme and provided the equivalent rating credit.

In some cases, an employee may not have three annual performance

ratings of record. In these situations, service credit will be given on

the basis of assumed ratings of C. If, however, an employee has ratings

from another system but not three demonstration project ratings, the

last three actual ratings will be translated into demonstration project

ratings. Ratings older than five years will not be used.

An employee who has received a written decision to demote him/her

to a lower pay band because of unacceptable performance, competes in

RIF from the position to which he/she will be/has been demoted.

Employees who have been demoted for unacceptable performance, and as of

the date of the issuance of the RIF notice have not received a

performance rating in the position to which demoted, will receive a

presumed fully successful rating for purposes of RIF credit.

An employee who has received an improved rating following a PIP

will have the improved rating considered as the current annual

performance rating of record.

An employee with a current annual performance rating of U has

assignment rights only to a position held by another employee who has a

U rating. An employee who has been given a written decision of removal

because of unacceptable performance will be placed at the bottom of the

retention register for their competitive level.

Modified term appointment employees are in Tenure Group III for

reduction in force purposes. Reduction in force procedures are not

required when separating these employees when their appointments

expire.

H. Grievances and Disciplinary Actions

Except where specifically waived or modified in this plan, adverse

actions procedures under 5 CFR part 752 remain unchanged; however, the

demonstration project will enhance the use of Alternative Dispute

Resolution (ADR) and Last Chance Agreements (LCA).

IV. Implementation Training

An extensive training program is planned for every employee in the

demonstration project and associated support personnel. Training will

be tailored to fit the requirements of every employee included and will

fully address employee concerns to ensure everyone has a comprehensive

understanding of the program. In addition, leadership training will be

provided to all managers and supervisors as the new system places more

responsibility and decision-making authority on their shoulders.

Training requirements will vary from an overview of the new system

to a more detailed package for laboratory managers on the new

classification system; to very specific instructions for both civilian

and military supervisors, managers, and others who provide personnel

and payroll support; to an employee handbook to be provided to each

covered ARL employee. Training will begin within the 90 days just prior

to implementation.

V. Conversion

A. Conversion to the Demonstration Project

Initial entry into the demonstration project will be accomplished

through a full employee protection approach that ensures each employee

an initial place in the appropriate pay band without loss of pay.

Employees serving under regular term appointments at the time of the

implementation of the demonstration project will be converted to the

modified term appointment if all requirements in III.D.3., Revisions to

Term Appointments, have been satisfied. Position announcements, etc.

will not be required for these term appointments. An automatic

conversion from current GS/GM grade and pay into the new broadband

system will be accomplished. Each employee's initial total salary under

the demonstration project will equal the total salary received

immediately before conversion. Special conversion rules apply to

special rate employees as described in III.E.4., Staffing Supplements.

Employees who enter the demonstration project later by lateral

reassignment or transfer will be subject to parallel pay conversion

rules. 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 III.E.3., Pay Fixing

Policies and Procedures. 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.

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

Position

If a demonstration project employee is moving to a General Schedule

(GS) 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 procedure will be used to convert the employee's project

pay band to a GS-equivalent grade and the employee's project rates of

pay to GS-equivalent rates of pay. The converted GS grade and GS 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

GS grade and rates will become the employee's actual GS grade and rates

after leaving the demonstration project (before any other action). For

transfers, promotions, and other actions the converted GS grade and

rates will be used in applying any GS pay administration rules

applicable in connection with the employee's movement out of the

project (e.g., promotion rules, highest previous rate rules, pay

retention rules) as if the GS 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 GS grade is

converted to that grade. An employee in a pay band corresponding to two

or more grades is converted to one of these grades according to the

following rules:

a. The employee's adjusted rate of basic rate under the

demonstration project (including any locality payment or staffing

supplement) 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

(1) the GS base schedule, (2) the locality rate schedule for the

locality pay area in which the position is

[[Page 11661]]

located, or (3) 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.

c. If the employee's adjusted project rate is lower than the

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

to 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) is converted to

a GS-adjusted rate on the highest applicable rate range for the

converted GS grade. (For this purpose, a GS rate range includes a rate

range in (1) the GS base schedule, (2) an applicable locality rate

schedule, or (3) an applicable special rate schedule.)

c. If the highest applicable GS rate range is a locality pay rate

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

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. Conversion of Rating Levels

In the event an employee leaves the demonstration project or if the

project is terminated, the performance ratings given under the

demonstration project pay for performance rating system will be

converted to an appropriate non-demonstration system. For purposes of

conversion, a rating of C under this plan equates to Summary Level 3

outlined in 5 CFR 430.208.

4. Within-Grade Increase--Equivalent Increase Determinations

Service under the demonstration project is creditable for within-

grade increase 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 project. The project evaluation plan adequately addresses

how each intervention will be comprehensively evaluated for at least

the first 5 years of the demonstration project. 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 project will

be reexamined for either: (a) permanent implementation, (b) change and

another 3-5 year test period, or (c) expiration.

VII. Evaluation Plan

Chapter 47 (Title 5 U.S.C.) requires that an evaluation system be

implemented to measure the effectiveness of the proposed personnel

management interventions. An evaluation plan for the entire laboratory

demonstration program covering 24 DOD laboratories was developed by a

joint OPM/DOD Evaluation Committee. A comprehensive evaluation plan was

submitted to the Office of Defense Research & Engineering in 1995 and

subsequently approved (Proposed Plan for Evaluation of the Department

of Defense S&T Laboratory Demonstration Program, Office of Merit

Systems Oversight & Effectiveness, June 1995). The overall evaluation

effort will be coordinated and conducted by OPM's Personnel Resources

and Development Center (PRDC). The primary focus of the evaluation is

to determine whether the waivers granted result in a more effective

personnel system than the current as well as an assessment of the costs

associated with the new system.

The present personnel system with its many rigid rules and

regulations is generally perceived as an impediment to mission

accomplishment. The demonstration project is intended to remove some of

those barriers and therefore, is expected to contribute to improved

organizational performance. While it is not possible to prove a direct

causal link between intermediate and ultimate outcomes (improved

personnel system performance and improved organizational

effectiveness), such a linkage is hypothesized and data will be

collected and tracked for both types of outcome variables.

An intervention impact model 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 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. Appendix E represents an

overview of the Evaluation Model. More detailed information about the

evaluation model is available upon request.

The evaluation model for the demonstration project identifies

elements critical to an evaluation of the effectiveness of the

interventions. The

[[Page 11662]]

overall evaluation approach will also include consideration of context

variables that are likely to have an impact on project outcomes; e.g.,

Human Resources Management 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: (1) Workforce data; (2)

personnel office data; (3) employee attitudes and feedback using

surveys, structured interviews, and focus groups; (4) local activity

histories; and (5) 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 falls below fully successful.

Rules governing Within-Grade Increases (WGI) under the current Army

performance plan will continue in effect until the implementation date.

Adjustments to the employees base salary for WGI equity will be

computed effective the date of implementation to coincide with the

beginning of the first formal PFP assessment cycle. WGI equity will be

acknowledged by increasing base salaries by a prorated share based upon

the number of weeks an employee has completed towards the next higher

step. Payment will equal the value of the employee's next WGI times the

proportion of the waiting period completed (weeks completed in waiting

period/weeks in the waiting period) at the time of conversion.

Employees at step 10 on the date of implementation will not be eligible

for WGI equity adjustments since they are already at the top of the

step scale.

B. Cost Discipline

An objective of the demonstration project is to ensure in-house

budget discipline. A baseline will be established at the start of the

project and salary expenditures will be tracked yearly. Implementation

costs, including the step buy-in costs detailed above, will not be

included in the cost discipline evaluations.

The Personnel Management Board will annually track personnel cost

changes and determine if adjustments are required to achieve the

objective of cost discipline.

C. Personnel Management Board

ARL will create a Personnel Management Board to oversee and monitor

the implementation and operation of the demonstration project. Its

specific functions are outlined below. The Board will be chaired by the

Deputy Director and consist of the Chief of Staff, Associate for

Science and Technology, the senior ranking civilian in each directorate

and center within the laboratory and the Program Manager for the ARL

Personnel Demonstration Project. EEO, Legal, Human Resources Office,

appropriate union representatives and the Staff Members Committee (SMC)

Chair will serve as non-voting advisors on the board. The board will be

responsible for:

(a) Determining the composition of the PFP pay pools in accordance

with the established guidelines,

(b) Providing guidance to pay pool managers,

(c) Overseeing disputes in pay pool issues,

(d) Overseeing the civilian pay budget,

(e) Monitoring award pool distribution by organization,

(f) Reviewing hiring and promotion salaries, to include approving

promotions over $5,000,

(g) Conducting classification review and oversight; monitoring and

adjusting classification practices and deciding broad classification

issues,

(h) Approving major changes in position structure,

(i) Addressing issues associated with multiple pay systems during

the demonstration project,

(j) Assessing the need for changes to demonstration project

procedures and policies,

(k) Ensuring in-house budget discipline.

D. Developmental Costs

Costs associated with the development of the demonstration project

system include software automation, training, and project evaluation.

All funding will be provided through the Army Science and Technology

budget. The projected annual expenses for each area is summarized in

Figure 4 below. Project evaluation costs will continue for at least the

first 5 years and may continue beyond.

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IX. Required Waivers to Law and Regulation

A. Waivers to Title 5 United States Code

Chapter 31, section 3111: Acceptance of volunteer service.

Chapter 33, section 3324: Appointments to Positions Classified

Above GS-15.

Chapter 33, section 3341: Details.

Chapter 41, section 4107 (a) (1), (2), (b) (1), (3): Restriction on

Degree Training.

Chapter 43, section 4301 (3): Definition of unacceptable

performance.

Chapter 43, section 4302-4303: This waiver applies to the extent

that the term ``grade level'' is replaced with ``pay band''.

Chapter 51, sections 5101-5111: Purpose, definitions, basis,

classification of positions, review, authority--This waiver applies to

the extent that white collar employees will be covered by broadbanding.

Pay category determination criteria for Federal Wage System positions

remain unchanged.

Chapter 53, sections 530l; 5302 (1), (8) and (9); 5303; and 5304:

Pay comparability system. (This waiver applies only to the extent

necessary to allow (1) demonstration project employees, except

employees in band V 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 V of the engineers and scientists

occupational family to be treated as SES and ST employees for the

purposes of these provisions.)

Chapter 53, section 5305: Special rates.

Chapter 53, sections 5331-5336: General Schedule pay rates.

Chapter 53, section 5362: Grade retention.

Chapter 53, section 5363: Pay retention. (This waiver applies only

to the extent necessary to (1) allow demonstration project employees to

be treated as General Schedule employees, and (2) 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.)

Chapter 55, section 5545 : Night, standby, irregular, and hazardous

duty differential. (This waiver applies only 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 V of the

engineers and scientists occupational family.)

Chapter 57, sections 5753, 5754, and 5755: Recruitment and

relocation bonuses, retention allowances, and supervisory differentials

(This waiver applies only 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 V of the engineers and scientists occupational family to be

treated as SES and ST employees)

Chapter 59, section 5941: Allowances based on living costs and

conditions of environment; employees stationed outside continental

United States or Alaska. (This waiver applies only to the extent

necessary to provide that COLA's paid to employees under the

demonstration project are paid in accordance with regulations

prescribed by the President (as delegated to OPM).)

Chapter 75, section 7512(3): Adverse actions. (This provision is

waived only to the extent necessary to replace ``grade'' with ``pay

band.'')

Chapter 75, section 7512 (4): Adverse actions. (This waiver applies

only to the extent necessary to provide that adverse action provisions

do not apply to conversions from General Schedule special rates to

demonstration project pay, as long as total pay is not reduced.)

B. Waivers to Title 5. Code of Federal Regulations

Part 300, sections 300.601 through 300.605: Time in grade

restrictions. Time in grade restrictions are eliminated in the

Demonstration project.

Part 308.101 through 308.103: Volunteer Service.

Part 315, sections 315.801 and 315.802: Probationary period.

Part 316, section 301 (Term Appointments for more than 4 years).

Part 316, section 303 (Converting Terms to Status).

Part 335, section 103: Covering the length of details and temporary

promotions.

Part 351, section 351.402(b): Competitive area.

Part 351, section 351.403: Competitive Level. (This waiver applies

only to the extent necessary to replace ``grade'' with ``pay band''.)

Part 351, sections; 351.504 as it relates to years of credit;

351.701 to the extent that employee bump and retreat rights will be

limited to one pay band except in the case of 30% preference eligible.

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Part 430, Section 207 (d): Definition of Unacceptable Performance.

Part 432: Modified to the extent that an employee may be removed,

reduced in band level with a reduction in pay or reduced in pay without

a reduction in band level based on unacceptable performance. Also

modified to redefine unacceptable performance.

Part 511, subpart A, General Provisions, and subpart B, Coverage of

the General Schedule.

Part 511, section 511.601: Classification Appeals modified to the

extent that white collar positions established under 5 U.S.C. 4703,

although specifically excluded from Title V, are covered by the

classification appeal process outlined in this section, as amended

below.

Part 511, section 511.603(a): Right to appeal--substitute band for

grade.

Part 511, section 511.607(b): Non-Appealable Issues--add to the

list of issues which are neither appealable nor reviewable, the

assignment of series under 5 U.S.C. 4703 to appropriate career paths.

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. (This

waiver applies only to the extent necessary to allow (1) demonstration

project employees, except employees in band V 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 V

of the engineers and scientists occupational family to be treated as

SES and ST employees for the purposes of these provisions.)

Part 536, Grade retention.

Part 536, section 536.104: Pay Retention. (This waiver applies only

to the extent necessary to 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.)

Part 536, sections 536.205 (b)(3), (c) and (d): Determination of

the rate of basic pay. (These provisions are waived only to the extent

necessary to replace ``grade'' with ``pay band''.)

Part 550, section 550.703: Severance Pay. (This provision is waived

only 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, section 550.902: Hazardous duty differential, definition

of ``employee''. (This waiver applies only 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 V of the

engineers and scientists occupational family.)

Part 575, subparts A, B, C, and D: Recruitment Bonuses, Relocation

Bonuses, Retention Allowances, and Supervisory Differentials. (This

waiver applies only 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 V of

the engineers and scientists occupational family to be treated as SES

and ST employees for the purposes of these provisions.)

Part 591, subpart B: Cost-of-Living Allowances and Post

Differential-Nonforeign Areas. (This waiver applies only to the extent

necessary to allow (1) demonstration project employees to be treated as

employees under the General Schedule and (2) employees in band V of the

engineers and scientists occupational family to be treated as SES and

ST employees for the purposes of these provisions.)

Part 752, section 752.401 (a)(3): Adverse actions. (This provision

is waived only to the extent necessary to replace ``grade'' with ``pay

band.'')

Part 752, section 752.401 (a)(4): Adverse actions. (This provision

applies only to the extent necessary to provide that adverse action

provisions do not apply to conversions from General Schedule special

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

reduced.)

Appendix A--ARL Employee Duty Locations (as of 17 JUN 96) (Totals

Include SES, ST and FWS Employees)

ARL Employees

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

Duty location Total

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

Seoul, Korea................................................... 1

Fort Rucker, AL................................................ 3

Redstone Arsenal, AL........................................... 4

Fort Huachuca, AZ.............................................. 4

Newark, DE..................................................... 1

Wilmington, DE................................................. 58

Hurlbert Field, FL............................................. 1

MacDill AFB, FL................................................ 1

Orlando, FL.................................................... 4

Atlanta, GA.................................................... 14

Fort Benning, GA............................................... 4

Fort Gordon, GA................................................ 2

Tripler Army Hospital, HI...................................... 1

Scott Air Force Base, IL....................................... 1

Fort Knox, KY.................................................. 2

APG, MD........................................................ 929

Adelphi, MD.................................................... 873

Baltimore, MD (JHU)............................................ 9

Gaithersburg, MD............................................... 3

LaPlata, MD (Blossom Point).................................... 4

Watertown, MA.................................................. 26

Warren, MI..................................................... 5

St. Louis, MO.................................................. 3

Fort Monmouth, NJ.............................................. 190

Picatinny, NJ.................................................. 6

White Sands Missile Range, NM.................................. 272

Fort Bragg, NC................................................. 1

Akron, OH...................................................... 1

Cleveland, OH.................................................. 52

Fairview Park, OH.............................................. 1

Fort Sill, OK.................................................. 8

Austin, TX..................................................... 1

Fort Bliss, TX................................................. 1

Fort Hood, TX.................................................. 9

Alexandria, VA................................................. 1

Arlington, VA.................................................. 1

Fort Belvoir, VA............................................... 81

Newport News, VA............................................... 50

Vint Hill Farms Station, VA.................................... 1

Woodbridge, VA................................................. 2

Fort Lewis, WA................................................. 1

--------

Total...................................................... 2,631

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

Appendix B: Occupational Series by Occupational Family

I. Engineers & Scientists

0180 Psychologist

0401 General Biological Science

0413 Physiology

0471 Agronomy

0690 Industrial Hygiene

0801 General Engineering

0803 Safety Engineering

0806 Materials Engineering

0810 Civil Engineering

0819 Environmental Engineering

0830 Mechanical Engineering

0840 Nuclear Engineering

0850 Electrical Engineering

0854 Computer Engineering

0855 Electronics Engineering

0861 Aerospace Engineering

0892 Ceramic Engineering

0893 Chemical Engineering

0894 Welding Engineering

0896 Industrial Engineering

0899 Engineering & Architecture Student Trainee

1301 General Physical Science

1306 Health Physics

1310 Physics

1320 Chemistry

1321 Metallurgy

1340 Meteorology

1386 Photographic Technology

1399 Physical Science Student Trainee

1515 Operations Research

1520 Mathematics

1529 Mathematical Statistician

1550 Computer Science

1599 Mathematics & Statistics Student Trainee

II. E&S Technician

0181 Psychology Aid & Technician

0802 Engineering Technician

0818 Engineering Drafting

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0856 Electronics Technician

1152 Production Control

1311 Physical Science Technician

1341 Meteorological Technician

1601 General Facilities & Equipment

1670 Equipment Specialist

III. Administrative

0018 Safety & Occupational Health Management

0028 Environmental Protection Specialist

0080 Security Administration

0101 Social Science

0170 History

0201 Personnel Management

0205 Military Personnel Management

0212 Personnel Staffing

0221 Position Classification

0230 Employee Relations

0235 Employee Development

0260 Equal Employment Opportunity

0301 Miscellaneous Administration & Program

0334 Computer Specialist

0340 Program Management

0341 Administrative Officer

0343 Management & Program Analysis

0346 Logistics Management

0391 Telecommunications

0501 Financial Administration & Program

0505 Financial Management

0510 Accounting

0511 Auditing

0560 Budget Analysis

0905 General Attorney

0950 Paralegal Specialist

1001 General Arts & Information

1020 Illustrating

1035 Public Affairs

1060 Photography

1071 Audio Visual Production

1082 Writing & Editing

1083 Technical Writing & Editing

1084 Visual Information

1101 General Business & Industry

1102 Contracting

1170 Realty

1222 Patent Attorney

1410 Librarian

1412 Technical Information Services

1640 Facilities Management

654 Printing Management

1811 Criminal Investigating

1910 Quality Assurance

2001 General Supply

2003 Supply Program Management

2010 Inventory Management

2101 Transportation Specialist

2130 Traffic Management

IV. General Support

0081 Fire Protection & Prevention

0083 Police

0085 Security Guard

0086 Security Clerical & Assistance

0303 Miscellaneous Clerk & Assistant

0304 Information Receptionist

0305 Mail & File

0318 Secretary

0322 Clerk Typist

0326 Office Automation Clerical & Assistant

0332 Computer Operation

0335 Computer Clerk & Assistant

0342 Support Services Administration

0344 Management Clerical & Assistant

0361 Equal Opportunity Assistant

0392 General Telecommunications

0503 Financial Clerical & Assistance

0525 Accounting Technician

0561 Budget Clerical & Assistant

0986 Legal Clerk & Technician

1087 Editorial Assistance

1105 Purchasing

1106 Procurement Clerical & Assistance

1411 Library Technician

1702 Education & Training Technician

2005 Supply Clerical & Technician

2102 Transportation Clerk & Assistant

Appendix C--Demographics and Union Representation (As of 17 June 1996)

SCIENTISTS & ENGINEERS......................................... 56%

E&S TECHNICIANS................................................ 9%

ADMINISTRATIVE................................................. 18%

GENERAL SUPPORT................................................ 12%

EXCEPTED SERVICE............................................... 5%

OCCUPATIONAL SERIES............................................ 119

DUTY LOCATIONS................................................. 41

VETERANS....................................................... 23%

The following unions have been notified about the project:

Adelphi, Maryland--AFGE Local 2 Fraternal Order of Police

Aberdeen Proving Ground, Maryland--AFGE Local 3176 IAM/AW Local 2424

Fort Monmouth, New Jersey--NFFE Local 476

White Sands Missile Range, New Mexico--NFFE Local 2049

Cleveland, Ohio--AFGE Local 2182

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[FR Doc. 97-6170 Filed 3-10-97; 8:45 am]

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