Science and Technology Reinvention Laboratory Demonstration Project at the U. S. Army Research Laboratory (ARL)

SUMMARY: The National Defense Authorization Act for Fiscal Year 1995

authorizes the Secretary of Defense, with Office of Personnel

Management (OPM) approval, to conduct personnel demonstration projects

at DoD laboratories designated as Science and Technology (S&T)

Reinvention Laboratories. 5 U.S.C. 4703 authorizes 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.

DATES: This demonstration project may be implemented at the Army

Research Laboratory on June 3, 1998.

FOR FURTHER INFORMATION CONTACT: ARL: Mr. Jack R. Wilson, II, U.S. Army

Research Laboratory Building 202, 2800 Powder Mill Road, Adelphi, MD

20783-1197, 301-394-1105; OPM: Fidelma A. Donahue, U.S. Office of

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

20415, 202-606-1138.

SUPPLEMENTARY INFORMATION:

1. Overview

On March 12, 1997, [62 FR 11646] OPM published this proposed

demonstration plan and received comments from nineteen employees, both

oral and written, including four speakers at the two public hearings.

In addition, questions were received from approximately 45 Army

Research Laboratory (ARL) employees who asked for clarifying

information. This information was provided to the ARL workforce via

mail posted to an electronic bulletin board. The following is a summary

of written and oral comments by topical area and a response to each:

A. Management Concerns

Comments: A number of employees who commented were greatly

concerned that the demonstration project gives more authority and

responsibility to laboratory supervisors and managers. It appears that

many believe supervisors do not properly execute supervisory

responsibilities under the current personnel management system and are

not held accountable for their actions. These employees question the

ability of ARL supervisors to competently and fairly implement their

new authorities, and fear a new system that gives supervisors

additional authority over their career and pay. Some also expressed

concern over the absence of language in the proposal regarding

diversity in the selection of representatives for various panels. For

instance, one commenter indicated the demonstration project and

specifically, the performance management system, would be used to

discriminate against African American employees.

Response: The text of the project proposal has been modified in

several places to clearly state the laboratory's commitment to

implement supervisory and managerial accountability processes and

emphasize that sensitivity to diversity issues is an important goal in

all phases of personnel management. The laboratory acknowledges

concerns expressed by employees and has attempted to build a number of

checks and balances in the new personnel system to ensure a fair and

equitably-administered program. These features include a Personnel

Management Board which will provide oversight for the project,

including specific responsibility for developing internal controls and

accountability processes. Other balances in the plan include a pay for

performance system which features a reconciliation process designed to

balance high and low rating profiles; expanded use of panels to provide

input and advice to supervisors in making personnel decisions regarding

training and promotion; enhanced use of Alternative Dispute Resolution

procedures and Last Chance Agreements in resolving conflict situations;

and a commitment to develop a mechanism for employees to provide

feedback to supervisors in an effort to further develop and improve

supervisory skills and abilities. The laboratory also plans a thorough

training program for all supervisors in the added responsibilities and

accountabilities associated with the personnel demonstration

interventions.

B. Broadbanding

Comments: The three comments received covered three distinct

concerns. First, one comment stated that capping pay at the top of the

highest grade in the pay band was discriminatory against older workers.

Another reviewer recommended that GS-1102 Contract Specialists be

deleted from the Administrative Occupational Family and be placed

instead in either a ``professional'' family or in a separate family.

Finally, one comment recommended that Installation Support Engineers

and Scientists be moved into the Administrative Occupational Family and

that the Engineer and Scientist Occupational Family be renamed

``Research Engineers and Scientists.''

Response: Salary caps outlined in the plan are essentially

identical to the current pay caps inherent in Step 10 of each GS grade.

Since traditional GS grades are combined into fewer pay bands under the

plan, the effects of pay capping in the current system are somewhat

diminished by the demonstration project. The Administrative

Occupational Family in which GS-1102 positions have been placed already

contains other professional occupational series such as Accountants and

Attorneys. Placement of occupations within job families was based on

similarity of qualification requirements, and the traditional OPM

method of grouping work into professional, administrative, technical,

clerical, and other (PATCO) categories, and with the understanding that

under the demonstration competitive areas for reduction in force

purposes have been defined in terms of occupational families. As a

result we did not change the plan to place Research Engineers and

Scientists in an occupational family apart from other engineering

positions.

C. Engineer and Scientist Pay Band V

Comments: Two comments objected to wording which stated that

employees in this band required primarily technical knowledges and

skills and that managerial skills were secondary. Another observed that

because of the current make-up of the workforce, women and minorities

would not be represented on selection panels for Band V positions. And

finally, a question was raised as to how Band V employees convert out

of the Demo plan.

Response: Based on the comments received, the text concerning

scientific and managerial skills and knowledges has been reworded to

clearly state that Band V positions require expert scientific technical

knowledges as well as strong managerial abilities. With regard to women

and minority representation on the Band V panels, the commenter has

raised an excellent point, and wording has been added to reflect the

laboratory's commitment to constructing panel membership so that

diversity of membership is ensured. The comment regarding how Band V

employees convert out of the plan identified a serious oversight and

wording has been added to describe

[[Page 10681]]

how this conversion will be handled. Revisions to this section also

included technical changes to better describe how Pay Band V will

function.

D. Pay for Performance

Comments: A total of twenty-three different points were made under

this general heading. These included the opinion that objectives should

not change during the rating period, particularly in the last 120 days;

that the new system did not appear to link organizational goals to

individual performance objectives; that objectives are not

quantitative; and that there was not enough space on the evaluation

form for the employee to adequately address yearly achievements. One

comment pointed out an error in a sentence dealing with Performance

Improvement Plans (PIPs) and Last Chance Agreements (LCAs), another

pointed out an inconsistency in the designation of Elements 7 and 8 as

mandatory/critical elements, and another suggested adding EEO to

Element 7. In addition, there were three suggested changes on how

employees could rate their supervisors (delink it from the appraisal,

create standardized criteria, and make it mandatory) and one reviewer

suggested the use of forced distribution to ensure an incentivized pay

pool. One reviewer commented that this new system is too subjective and

that the Total Army Performance Evaluation System (TAPES) should be

improved instead of creating a new system; that Civilian Intelligence

Personnel Management System (CIPMS) employees should be excluded from

the plan; and that the benchmark point fixing was such that meaningful

distinction could not be justified. This was accompanied by the

suggestion that benchmark points be in 5 point increments rather than

in the one point increment outlined in the plan. One reviewer stated

that the new Pay for Performance (PFP) system conflicted with teaming

and that all Labs should use the same wording to describe their

performance elements. ARL also received one comment which suggested

that career interns will lose money under the new plan when compared to

what would have been received under the current system. One commenter

suggested clarifying language changes to the Performance Conference

Form. Finally one commenter was concerned that Installation Support

Engineers and Scientists would be treated unfairly if competing in the

same pay pool as Research Engineers and Scientists.

Response: Objectives and Performance Elements: Rather than having

performance objectives remain fixed during the rating cycle, the

ability to change objectives as work assignments change is considered

an important flexibility in any performance management system. This

flexibility prevents an employee from being rated against objectives

that are no longer applicable or have changed due to fluctuations in

the work. This ensures employees are properly recognized for the tasks

they are actually performing. The proposed demonstration plan stated

that the plan was designed to tie individual performance to

organizational goals, and the description of the objective setting

process clearly stated that objectives were ``to be based on the work

unit's mission and goals.'' Regarding the comment that the objectives

were not quantitative, there is nothing in the demonstration project

that would prohibit wording objectives in quantitative terms. Training

on the performance evaluation system will suggest that quantitative

measures of objectives be incorporated wherever possible. As each of

the five Army demonstration projects will operate in discrete

environments, standardizing element titles serves no useful purpose.

The only changes made to this section of the plan relate to the

designation of Elements 7 & 8 as mandatory and/or critical and to the

expansion of Element 7 to reflect sensitivity to diversity and to

assure equity and fairness.

Appraisal Form: The appraisal forms were included in the proposed

plan as examples of the tools available for raters during the

performance evaluation process. As with all forms, they can be improved

upon and the commenter has several good suggestions that will be

adopted before implementation.

Employees Rating Supervisors: ARL has decided to delete the entire

paragraph dealing with employees rating supervisors. More benefit would

be derived by both the employee and the laboratory if employee feedback

were given in a more informal setting and if the feedback were delinked

from the performance appraisal process. A new provision has been

included under Section F. ``Employee Development'' which calls for

informal feedback to the supervisor which in turn will be used for

developmental purposes.

Forced Distribution of Ratings: During the development of the

project, many town hall meetings with employees were held and the

question of forced distribution arose. It was clear that the majority

of the work force was against such a policy. Therefore, the plan, in

conformance with existing DoD policy, specifically prohibits such a

practice; to alter that position would break faith with what was

promised to laboratory employees.

Subjective System: The laboratory believes the proposed system

improves on the current process. The use of benchmark standards in

conjunction with the ability to weight performance elements to the

exact requirements of each position provides the rater with a more

quantitative way to rate performance than exists today. On the

suggestion that benchmark point-fixing be in 5 point increments, there

is nothing in the plan that would prohibit the rater from operating in

5 point increments if he/she so desired. However, it was decided to

maintain the flexibility of the 1 point increment so that close shading

and distinctions can be made during the evaluation process.

Intern Pay: With regard to the comments on intern pay, the twice

annual appraisal process should provide ample opportunity for intern

pay to be reviewed and adjusted as appropriate. The plan has been

revised to reflect that procedures will be developed which will ensure

comparability of the pay and promotion practices for interns.

LCAs and PIPs: Finally, the laboratory appreciates being informed

of an error in wording in the section dealing with Last Chance

Agreements and Performance Improvement Plans. The original wording

indicated that two conditions had to be met before the supervisor could

take appropriate follow-on action after instituting a PIP. This

situation has been corrected.

Other: Language has been added to the Performance Conference Form

for clarification. Since pay pools are based on organizational units,

it is unlikely that Installation Support Engineers and Scientists would

be in the same pay pool as Researchers. However, even if they were, the

system is designed so that each is rated according to benchmark

standards and objectives for his or her own job. As a result, no

changes were made to the plan regarding the last two suggestions.

E. Pay Pools

Comments: There were nine comments/suggestions on this topic. One

suggested that pay pool size be specifically limited, i.e., between 10

and 50; one suggested that specific penalties be levied on supervisors

when appraisals were late; one suggested that the annual pay increase

be added to the pay pool and that the Director have the ability to

reward high performing pay pools. One reviewer wanted team leaders to

be added to supervisory pay pools; another comment suggested that when

team awards were granted that distribution be based on a unanimous

[[Page 10682]]

vote. One reviewer wanted the pay pool reconciliation process deleted.

Finally, one reviewer wanted clarification of awards program language

and wanted all pay pools to work under a single ARL-wide policy.

Response: One of the philosophical underpinnings of the plan is to

ensure pay pools are created along organizational lines. Constructing

pay pools in this manner allows the use of existing managerial

authorities and relationships to facilitate various aspects of the

plan. It is also believed that organizationally focused pay pools will

facilitate teaming. The Personnel Management Board will make

recommendations to the ARL Director about the size of pay pools, but

conventional thinking is that a size of approximately 50 is necessary

to have a properly funded pool.

The Personnel Management Board will develop methods to ensure

performance appraisals are done on time. The Director's policy

decisions will be published in the laboratory's implementing

instructions for the demonstration.

From the beginning of the plan's development the laboratory has

promised that all employees would receive annual pay increases and

locality pay (as applicable) as provided by law and Presidential

authority. To alter the plan on this point would break faith with the

ARL workforce.

Team leaders within ARL function primarily as non-supervisory

employees and are technically oriented, focused primarily on non-

managerial issues. Therefore, team leaders are more appropriately

placed in non-supervisory pay pools rather than in supervisory pay

pools where the duties and responsibilities of the work are materially

different.

The reviewer's suggestion that the distribution of team awards be

based on a unanimous vote was considered, but the laboratory decided to

maximize team autonomy and leave such decisions up to the individual

teams.

A cornerstone of the pay for performance system is that raters in a

pay pool meet to reconcile preliminary ratings. This reconciliation

process is considered vital to achieving equity and fairness within the

pool. Reconciling scoring between raters is one of several checks and

balances built into the demonstration project to ensure that

supervisors execute their new authorities in a responsible manner.

Based on these analyses, no changes were made to the plan.

The project plan has been modified to permit the laboratory

director to adjust the amount of funds in each pay pool as necessary to

recognize exemplary performance of individuals or teams/groups. The

plan also includes the provision that the Director may divert funds

from other pay pools for this purpose.

The confusing language regarding the awards program has been

deleted. The issue is clearly stated elsewhere in the plan. Language

was also added to the plan to indicate that pay pools would operate

within the guidelines of the Personnel Management Board.

F. Employee Development and Training

Comments: ARL received four comments generally related to employee

development or training. One employee wanted to know whether managers

would be tested for proficiency after demonstration program training

was accomplished. One reviewer observed that encouraging rapid turnover

of employees argued against the Laboratory's ability to develop its

workforce and perform new mission work. One observed that the amount of

money set aside for training employees on the plan's provisions was too

small and finally, one suggested that some Cooperative Education

Program (COOP) students be paid living expenses as an incentive to work

at ARL.

Response: There are no plans to test supervisor proficiency as part

of the implementation process; however, wording has been added on

enhanced supervisory accountability which should strengthen this

concept throughout the plan.

The Army Research Laboratory does not currently, or in any of the

goals in this demonstration project, encourage rapid turnover in any

form. In fact, it is believed that the demonstration project's

provisions for correcting critical skills imbalances will indeed permit

valued employees to be retrained to accomplish new mission work.

The amount of money projected for training the workforce and

supervisors on the new personnel system was too small. A revised

estimate has been developed and the language describing demonstration

project costs has been clarified.

Regarding paying living expenses for COOPs, initiatives in this

area do not fall within the purview of this demonstration authority

which is limited to the rules and regulations contained in Title 5.

G. Reduction in Force

Comments: ARL received two suggestions that years of extra credit

for RIF be averaged as in the current system and not added as is

provided for in the plan. A third reviewer observed that the reliance

on weighting performance in RIF was inconsistent with Congressional

intent. Finally, one commenter stated the number of years allowed was

too high (should be divided by a factor of 2) and suggested that all

employees enter the demonstration with no additional years of credit

for RIF and begin the new system on a level playing field.

Response: One of the basic foundations of the plan is to place

increased emphasis on performance. One method of achieving this goal is

to add and not average RIF retention years. In other words, one of the

experimental ideas is that performance is more important than seniority

by itself. Another goal of the demonstration project is to design a RIF

system that will improve the retention of high performers.

The legislative proposal referred to by the commenter (the Omnibus

Civil Service Reform Bill of 1996) was never adopted, and no evidence

has been presented to indicate that the majority of Congress preferred

to alter current rules which permit performance to be a factor in

reduction in force. In fact, the legislation which permits this

personnel demonstration project charges DoD to implement plans which

are similar in nature to China Lake. One of the foundations in the Navy

China Lake demonstration is a performance-based reduction in force

system. Since the emphasis in this plan is on pay-for-performance it

was decided to maintain the technique of adding, rather than averaging

the years of RIF service credit.

H. Miscellaneous Comments

Comments: There were fifteen miscellaneous comments, suggestions

and recommendations dealing with various aspects of the plan. One

reviewer wanted all changes, not just major ones, to be published in

the Federal Register, and suggested that requests for salary increases

in excess of $5,000 be sent to higher headquarters. One reviewer

observed that the current system should not be changed and did not want

to participate. There were several suggestions that changes be made to

the composition and operation of the Personnel Management Board. One

employee wanted to know whether under the plan movement into the ``high

grade'' category (old GS-14 and GS-15) was going to be as difficult as

under the current system and another suggested that supervisors be

placed under a three-year probationary period. One commenter suggested

the Distinguished Scholar Program be considered as an addition to the

project. Still another indicated that the plan was without

[[Page 10683]]

evaluation or internal controls and that an alternative way to convert

employees out of the plan should be considered: Under this alternative

arrangement, the comment suggests that the duties actually being

performed be evaluated before pay is set prior to converting employees

out of the plan. One reviewer suggested adding the recent laboratory

initiatives in Alternative Dispute Resolution. Finally, one commenter

questioned whether a conflict of interest would exist for industry

employed people eligible for the Voluntary Emeritus Corps; suggested

that conversion out of the demonstration should use step 2 rather than

step 4 salary; and recommended that the pro-rated within grade increase

buy-ins should be rounded up to the next pay period rather than the

nearest week as described.

One commenter asked for an explanation of ``culturally relevant

criteria'' used in Section II.B. ``Problems with the Current System''.

Response: Several of the suggestions would result in increasing

administrative burdens on the laboratory. This is in conflict with one

of the basic goals of the demonstration project. Therefore, it was

decided not to publish all changes since that would be both costly and

a significant administrative workload. Similarly, forwarding proposed

promotions exceeding $5,000 to higher headquarters imposes an

additional review level in the process and reduces rather than

increases laboratory flexibility. Finally, to conduct classification

reviews for each employee leaving the laboratory places an unacceptable

workload burden on the personnel offices administering the plan.

Promotions from Pay Band 3 to Band 4 under this plan are expected

to remain as difficult as promotions from GS-13 to GS-14 are under the

current system for as long as controls on the number of high grade

positions remain in place. The laboratory decided against changing the

supervisory probationary period to three years because supervisory

performance, unlike certain engineers and scientists can be adequately

evaluated in a one-year period. Wording on Distinguished Scholar is not

added as the current plan provides the full range of flexibilities

necessary to recruit college graduates to the laboratory.

Enhanced accountability is a central concept of this proposal and

the Personnel Management Board will be one of several groups that will

be involved in the oversight of the demonstration. Other oversight will

come from the Office of Personnel Management as well as elements with

DoD and DA.

It was decided not to include the recent laboratory initiatives in

the area of Alternate Dispute Resolution because they do not involve

any waivers to law. Language was added to clarify that the

demonstration project will enhance the use of Alternative Dispute

Resolution for all conflict resolution to include grievances,

disciplinary actions and EEO matters.

The question regarding potential conflicts of interest for

industry-employed personnel eligible for the laboratory's new Voluntary

Emeritus Corps is a good one and has been discussed by the Personnel

Management Board. The suggestion will be considered for inclusion in

the operating instructions to be developed prior to implementation of

the project. The conversion out method was carefully crafted by experts

in the field of compensation and represents a joint agreement among the

five Army laboratories who published proposed demonstration projects in

March 1997; therefore, the suggestion was not adopted. Finally, the

method of pro-rating the amount of within-grade increases using weeks

of the waiting period completed is consistent with the definition of

waiting periods in the existing law and offers the employee the full

amount earned. To round up as suggested would add unnecessary costs.

The statement regarding culturally relevant criteria is only part

of the introductory material which attempts to explain why the

cumbersome government-wide system is counterproductive to management in

a changing environment. In particular, the culture of a research

laboratory is considerably different from a typical bureau or agency,

and the demonstration project attempts to tailor the personnel system

to the laboratory environment.

2. Demonstration Project Changes

The following is a summary of substantive changes and

clarifications which have been made to the project proposal. While not

specifically listed, the laboratory also made a number of technical

changes to correct errors or omissions or to meet other regulatory

requirements.

(1) II. Introduction A. Purpose--Added wording to enhance

supervisory accountability under the improved personnel management

system.

(2) II. Introduction E. Participating Employees and Union

Representation--Added wording to clarify that CIPMS employees will not

be covered by the plan, but will follow the same performance appraisal

and employee development provisions of the plan except where found to

be in conflict with CIPMS.

(3) III. Personnel System Changes A. Broadbanding, Figure 1--An

asterisk was added to the plan to more directly tie it to the text

which follows.

(4) III. Personnel System Changes A. Broadbanding--Changed wording

from January pay increase to periodic pay increases to reflect that pay

increases may not always occur in January.

(5) III. Personnel System Changes A. Broadbanding--Clarified the

requirement for significant managerial and supervisory expertise, and

made several technical changes to reflect how Pay Band V will function.

(6) III. Personnel System Changes A. Broadbanding--Revised the

description of the Pay Band V selection panel to ensure diversity of

membership.

(7) III. Personnel System Changes B. Classification 8.

Classification Appeals--Revised classification appeal rights to reflect

that all appeals must go to the DoD appellate level before going to

OPM.

(8) III. Personnel System Changes C. Pay for Performance 1.

Overview--Revised language to read ``a performance payout'' rather than

``pay increases.''

(9) III. Personnel System Changes, C. Pay for Performance, 1.

Overview--Deleted paragraph 2, line 8, column 3 (under the chart) as it

was redundant, because issue was already explained clearer in another

section of the plan.

(10) III. Personnel System Changes C. Pay for Performance 1.

Overview--Changed the words ``base pay adjustment'' to ``performance

payout.''

(11) III. Personnel System Changes C. Pay for Performance 1.

Overview--Revised the description of the Director's authority to adjust

the amount of funds assigned to pay pools. The authority has been

expanded to include adjustments needed to recognize exemplary

performance of individuals or teams/groups and contains the provision

that the director may divert funds from other pay pools for this

purpose.

(12) III. Personnel System Changes C. Pay for Performance 1.

Overview--Added a sentence providing for the development of procedures

which will ensure that intern salaries under the project will be

comparable with current pay and promotion practices.

(13) III. Personnel System Changes C. Pay for Performance 2. The

PFP Assessment Process--Clarified language concerning employees current

grievance rights.

(14) III. Personnel System Changes C. Pay for Performance 2. The

PFP

[[Page 10684]]

Assessment Process--Revised language to read ``performance payout''

rather than ``salary increases.''

(15) III. Personnel System Changes C. Pay for Performance 2. The

PFP Assessment Process--Clarified definition of a critical element.

(16) III. Personnel System Changes C. Pay for Performance 2. The

PFP Assessment Process--Revised the definition of performance element 7

``Management/Leadership'' to specifically include sensitivity to

diversity and to ensure equity and fairness.

(17) III. Personnel System Changes C. Pay for Performance 2. The

PFP Assessment Process--Clarified internal inconsistency dealing with

elements 7 & 8 being critical and/or mandatory for supervisors.

(18) III. Personnel System Changes C. Pay for Performance 2. The

PFP Assessment Process--Deleted provision for employees to provide

input to supervisors appraisals.

(19) III. Personnel System Changes C. Pay for Performance 3.

Performance Which Fails to Meet Expectations C. Improving Performance--

Reworded the sentence describing a PIP and LCA to remove unnecessary

restriction.

(20) III. Personnel System Changes C. Pay for Performance 4. Pay

Pools--Revised the wording describing the size of pay pools which will

permit pay pool size to be greater than or less than 50.

(21) III. Personnel System Changes C. Pay for Performance 4. Pay

Pools--Added the provision that reconciliation panels will work within

operating procedures established by the Personnel Management Board.

(22) III. Personnel System Changes D. Hiring and Appointment

Authorities 4. Voluntary Emeritus Corps--Removed the restriction which

limited Voluntary Emeritus Corps to Engineers, Scientists and

Technicians.

(23) III. Personnel System Changes E. Internal Placement and Pay

Setting 1. Promotions--Revised the amount of money to be reviewed by

the PMB for promotions, permitting the PMB to adjust the amounts of

money they review.

(24) III. Personnel System Changes E. Internal Placement and Pay

Setting 4. Staffing Supplements--Revised the wording concerning

adjusting special rate schedules and the need to recompute the staffing

supplement.

(25) III. Personnel System Changes F. Employee Development 2.

Employee Development Panels--Revised the provision that a Continued

Service Agreement will be a commitment to ARL rather than the

government for ARL Sponsored Training.

(26) III. Personnel System Changes F. Employee Development--Added a

new paragraph 4. Employee Feedback to Supervisors, which permits

employees to provide feedback to their supervisors on their supervisory

and managerial skills.

(27) III. Personnel System Changes H. Grievances, Disciplinary

Actions and EEO--Revised the section on grievances and disciplinary

actions to include reference to EEO issues and specifically encourage

the use of ADR for grievance, disciplinary and EEO matters.

(28) V. Conversion B. Conversion or Movement From a Project

Position to a General Schedule Position 2. Pay-Setting Provisions--

Added a new paragraph to provide for converting an employee out of the

demo from Pay Band V.

(29) V. Conversion B. Conversion or Movement From a Project

Position to a General Schedule Position 2. Pay-Setting Provisions--

Added new paragraph d. to describe certain pay retention events and

renumbered the remaining paragraphs.

(30) VIII. Demonstration Project Costs C. Personnel Management

Board--Revised overall responsibility of the Personnel Management Board

to include: fair and equitable implementation; responsibility to

establish internal controls and accountability; clarify description of

membership; allow the Director to adjust membership on the board, and

to clarify that the board's listed duties are examples. Made

consistency changes to item VIII C. Personnel Management Board (f.).

(31) VIII. Demonstration Project Costs D. Developmental Costs--

Revised wording to show that money reflected in Figure 4 is additional

incremental projected annual expense.

(32) VIII. Demonstration Project Costs D. Developmental Costs

Figure 4--Changed to reflect additional incremental training costs for

FY98 of $30K and revised FY98 total.

(33) IX. Required Waivers to Law and Regulation--Changed waiver

language to make it consistent with the plan.

(34) Appendix D Performance Management Forms--Revised the personnel

management forms to reflect changes made in the text of the plan and to

provide clarifying instructions.

Dated: February 26, 1998.

Office of Personnel Management.

Janice R. Lachance,

Director.

Table of Contents

I. Executive Summary

II. Introduction

A. Purpose

B. Problems with the Present System

C. Changes Required/Expected Benefits

D. Participating Organizations

E. Participating Employees 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, Disciplinary Actions, and EEO Matters

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 project was designed by the Army Research Laboratory (ARL) 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

[[Page 10685]]

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 of 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

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 hold them accountable for the proper

exercise of this authority within the framework of 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 title 5

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 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 10 are not covered but will follow the same

performance appraisal and employee development provisions of this plan

except where they are found to be in conflict with CIPMS. 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)

[[Page 10686]]

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

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 pursuant to OPM

approval.

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 project's 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.

Occupational Families

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.

[[Page 10687]]

Figure 1.--Broadbanding

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

Corresponding GS grades

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

Occupational families Above

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 15

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

(15)Bands

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

Engineers and Scientists........................

(3)I

(6)II

(1)III

(1)IV V

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

E&S Technicians.................................

(7)I

(2)II

(1)III

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

Administrative..................................

(3)I

(5)II

(2)III

(1)IV

(3)

(5)

(2)(*)

(1)

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

General Support.................................

(3)I

(2)II

(2)III

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

*Administrative Pay Band III includes two full performance levels because not all work.

The pay bands for the occupational families and how they relate to

the current GS framework are shown in Figure 1. 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 as

the increases are approved, except for some employees in pay band V.

Since the maximum rate for payband V is linked to ES-4, employees at or

near the top of the band may not receive the full general increase if

it is not authorized for SES employees. 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

Scientific Technical Managers.

Current legal definitions of Senior Executive Service (SES) 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 reserved for bench research scientists and engineers; these

positions require a very high level of technical expertise and they

have little or no supervisory responsibility.

ARL currently has several positions, typically division chiefs,

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 research engineers

and scientists and, in some cases ST positions. Most division chief

positions are classified at the GS-15 level, although their technical

expertise warrants classification beyond GS-15. Because of their

management responsibilities, these individuals are excluded from the ST

system. Because of management considerations, they cannot be placed in

the SES. 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.

Historically, incumbents of these positions have been recognized within

the community as scientific and engineering leaders, who possess

primarily scientific/engineering credentials, and are considered

experts in their field. However, they must also possess strong

managerial and supervisory abilities. Therefore, although some of these

employees have scientific credentials that might compare favorably with

ST criteria, classification of these positions as STs is not an option,

because the managerial and supervisory responsibilities inherent in the

positions cannot be ignored.

The purpose of Pay Band V (which will reinforce the equal pay for

equal work principle) is to solve a critical classification problem. It

will also contribute to an SES ``corporate culture'' by excluding from

the SES positions for which technical expertise is paramount. Pay Band

V attempts to overcome the difficulties identified above by creating a

new category of positions, the Senior Scientific Technical Manager,

which has both scientific/technical expertise and full managerial and

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 salary range

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

maximum rate of basic pay established at the rate of basic pay

(excluding locality pay) for SES level 4 (ES-4). Vacant positions in

Pay Band V will be competitively filled to ensure that selectees are

preeminent researchers and technical leaders in the specialty fields

who also possess substantial managerial and supervisory

[[Page 10688]]

abilities. 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,

later, those in Pay Band V, and an equal number of individuals of

equivalent stature from outside the laboratory to ensure impartiality,

diversity, 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.

DoD will test the establishment of Pay Band V for a five-year

period. Positions established in Pay Band V will be subject to

limitations imposed by OPM and DoD. Pay Band V positions will be

established only in an S&T Reinvention Laboratory which employs

scientists, engineers, or both. Incumbents of Pay Band V positions will

work primarily in their professional capacity on basic or applied

research and secondarily perform managerial or supervisory duties. The

number of Pay Band V positions within the Department of Defense will

not exceed 40. These 40 positions will be allocated by ASD (FMP), DoD,

and administered by the respective Services. The number of Pay Band V

positions will be reviewed periodically to determine appropriate

position requirements. Pay Band V position allocations will be managed

separately from SES, ST, and SL positions. An evaluation of the Pay

Band V concept will be performed during the fifth year of the

demonstration project.

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

V assets. Specifically, this authority will be exercised within DA and

includes the following: authority to classify, create, or abolish

positions within the limitations imposed by OPM and DoD; recruit and

reassign employees in this pay band; set pay and appraise performance

under this project's Pay for Performance System. 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 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 ARL Director will have delegated classification authority and

may, in turn, re-delegate 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 project's 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

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.

[[Page 10689]]

(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.

Figure 2.--FLSA

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

Occupational family I II III IV V

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

E&S................................................................ N N E E E

E&S Technicians.................................................... N N E

Administrative..................................................... N N E E

General Support.................................................... N N N

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

8. Classification Appeals

An employee may appeal the occupational series, position title, and

pay band of his or her position at any time. An employee must formally

raise the area of concern to supervisors in the immediate chain of

command, either verbally or in writing. If the employee is not

satisfied with the supervisory response, he or she may then appeal to

the DoD appellate level. If the employee is not satisfied with the DoD

response, he or she may then appeal to the Office of Personnel

Management only after DoD has rendered a decision under the provisions

of this demonstration project. Since OPM does not accept classification

appeals on positions which exceed the equivalent of a GS-15 level,

appeal decisions involving Pay Band V will be rendered by DoD and will

be final. Appellate decisions from OPM are final and binding on all

administrative, certifying, payroll, disbursing, and accounting

officials of the Government. Time periods for case processing under

Title 5 apply.

An employee may not appeal the accuracy of the position

description, the demonstration project classification criteria, or the

pay-setting criteria; the assignment of occupational series to the

occupational family; the propriety of a salary schedule; or matters

grievable under an administrative or negotiated grievance procedure or

an alternative dispute resolution procedure.

The evaluation of classification appeals under this demonstration

project are based upon the demonstration project classification

criteria. Case files will be forwarded for adjudication through the

CPOC providing personnel service and will include copies of appropriate

demonstration project criteria.

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, and provides an understandable basis for salary

changes.

PFP also 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 a performance payout commensurate with their achievements. The

PFP System uses a 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.

Decisions regarding the amount of the performance payout 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 salary range

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

maximum rate of basic pay established at the rate of basic pay

(excluding locality pay) for ES-4.

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

[[Page 10690]]

Director may adjust the amount of funds assigned to each pay pool as

necessary to recognize exemplary performance of individuals or teams/

groups, to ensure equity and to meet unusual circumstances. The ARL

Director may divert funds from other pay pools for this purpose. No

changes will be made to locality pay under the demonstration project

and all employees continue to receive general pay increases.

The PFP system 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 performance 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.

Procedures will be developed which will provide intern salary

increases so as to ensure comparability with current pay promotion

practices.

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 current grievance

rights. Use of Alternative Dispute Resolution is recommended. 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, at least one of which must be

identified as critical. A critical performance element is defined as a

generic attribute of job performance that is 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/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 to include

sensitivity to diversity and to assure equity and fairness. 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

[[Page 10691]]

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 both Management/Leadership and Supervision/EEO

elements, Elements 7 and 8 respectively. Element 8, Supervision/EEO,

will 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.

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 least 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.

Figure 3.--RIF Retention and Compensation

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

RIF

Retention

Rating Compensation years

added

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

A................................. 3 or 4 shares............ 10

B................................. 2 or 3 shares............ 7

C................................. 0 or 1 share............. 3

U................................. 0 shares................. 0

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

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 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, and may

consider initiating the process for performance improvement in c. below

if circumstances warrant.

b. End of Rating Cycle Performance Evaluation

Employee performance will be formally reviewed at the end of the

rating cycle. If an employee's summary 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.

[[Page 10692]]

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, if offered), 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 allow for a range of

ratings to encompass a reasonable distribution of ratings, typically

50. A pay pool manager's final yearly pay adjustment decisions 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 one generated by 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, base pay increases and bonuses. The amount of

money which can be used for base pay 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 the pay pool funding formula and recommend adjustments

to the Director, 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 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 percentage 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

only 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

[[Page 10693]]

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 within the

guidance provided by the Personnel Management Board. 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-5 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.

Because the ARL broadbanding plan places GS-9 and GS-11 scientific

and professional positions in a band with lower-graded positions, the

procedures for applying veterans' preference to Scientific and

Professional positions in grades GS-9 or higher (5 U.S.C. 3313) shall

only apply to Scientific and Professional positions in bands that

exclusively include grades GS-12 and above.

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

[[Page 10694]]

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 employees 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 director.

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

directorate director 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 director, 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 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

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,

[[Page 10695]]

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 10 percent or other such amount

established by the Personnel Management Board. However, on a case-by-

case basis, the Personnel Management Board may recommend approval of

requests for promotion beyond 10 percent. 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 ARL Director 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 under rules similar to the HPR rules in 5 CFR

531.203(c) and (d). 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, retention, and

relocation payments as currently provided for by OPM.

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:

[[Page 10696]]

[GRAPHIC] [TIFF OMITTED] TN04MR98.008

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

Salary upon conversion = demonstration base rate + staffing supplement

(sum will equal existing rate)

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

special salary rate, the salary before the demonstration project is

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

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

computed as follows:

[GRAPHIC] [TIFF OMITTED] TN04MR98.009

Then to determine the staffing supplement, multiply the demonstration

base by the staffing factor minus 1.

[GRAPHIC] [TIFF OMITTED] TN04MR98.010

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.

Any General Schedule or special rate schedule adjustment will

require recomputation of the staffing supplement. Employees receiving a

staffing supplement 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, affected

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 basic 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

can be 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

band (requiring a different level of expertise and qualifications) 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.

F. Employee Development

1. Expanded Development Opportunities

The ARL Expanded Developmental Opportunities Program, to include

sabbaticals, will cover all demonstration project employees. The

developmental opportunity period will not result in loss of (or

reduction in) basic pay, leave to which the employee is otherwise

entitled, or credit for time of service. The positions of employees on

[[Page 10697]]

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.

a. Sabbaticals

ARL will have the authority to grant paid sabbaticals to career

employees to permit them to engage in study or uncompensated work

experience that will contribute to their development and effectiveness.

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

may be granted to an employee in any 10-year period. 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; research;

self-directed or guided study; and on-the-job work experience with a

public, private commercial, or private nonprofit organization.

b. 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 is expanding 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) and 4108.

2. Employee Development Panels

Each directorate (or equivalent organizational unit) will create an

Employee Development Panel which will be chaired by the directorate

director. 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 director 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 director 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 Army Research Laboratory three times the length of the training

period. If he/she voluntarily leaves the ARL before the service

obligation is completed the employee is liable for repayment. The ARL

Director has the authority to waive this agreement.

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 performance 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 Feedback to Supervisors

Procedures will be developed by which employees can provide

feedback to supervisors on supervisory/managerial skill. This feedback

is designed to assist supervisors in determining their developmental

needs with regard to their supervisory skills.

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 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, and length of

service as adjusted by performance ratings, in that order. However, the

additional RIF service credit for performance based on

[[Page 10698]]

the last three ratings of record during the 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 ratings of record. In

these situations, service credit to provide three values will be given

on the basis of modal ratings or averaged years of credit associated

with actual performance ratings under the provisions of 5 CFR 351.504,

with years credited as above. 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 four years will not be used.

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

to a lower pay band competes in RIF from the position to which he/she

will be/has been demoted. Employees who have been demoted for

unacceptable performance or conduct, 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 the same additional retention

service credit granted for a level 3 rating of record.

An employee who has received an improved rating following a PIP

will have the improved rating considered as the current rating of

record, provided that notification of such improvement is approved and

received prior to the cutoff for receipt of personnel actions

associated with implementation of RIF mechanics.

An employee with a current rating of record 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 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, Disciplinary Actions and EEO Matters

Except where specifically waived or modified in this plan, adverse

actions procedures under 5 CFR 752 remain unchanged. The demonstration

project will enhance the use of Alternative Dispute Resolution (ADR)

for all conflict resolution to include grievances, disciplinary actions

and EEO matters.

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:

[[Page 10699]]

a. The employee's adjusted rate of basic pay 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 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).

e. E&S Pay Band V Employees: An employee in Pay Band V of the E&S

Occupational Family will convert out of the demonstration project at

the GS-15 level. ARL will develop a procedure to ensure that employees

entering Pay Band V understand that if they leave the demonstration

project and their adjusted project pay exceeds the GS-15, Step 10 rate,

there is no entitlement to retained pay. Their GS equivalent rate will

be deemed to be the rate for GS-15, Step 10. For those Pay Band V

employees paid below the adjusted GS-15, Step 10 rate, the converted

rates will be set in accordance with paragraph b.

f. Employees with Pay Retention: If an employee is receiving a

retained rate under the demonstration project, the employee's GS-

equivalent grade is the highest grade encompassed in his or her band

level. ARL will coordinate with OPM to prescribe a procedure for

determining the GS-equivalent pay rate for an employee retaining a rate

under the demonstration project.

3. 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

[[Page 10700]]

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 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 toward 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 or receiving retained rates on the date of

implementation will not be eligible for WGI equity adjustments since

they are already at or above the top of the step scale. Employees

serving on retained grade, will receive WGI equity adjustments provided

they are not at step 10 or receiving a retained rate.

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 recommend adjustments if required to achieve the objective

of cost discipline.

C. Personnel Management Board

ARL will create a Personnel Management Board to oversee and monitor

the fair and equitable implementation of the demonstration project to

include establishment of internal controls and accountability.

The board will consist of senior leadership of ARL appointed by the

Director who will be voting members. Non-voting members will include

the Program Manager for the ARL Personnel Demonstration Project, Equal

Opportunity Officer, Chief Counsel, a representative of the human

resources community, union representative, and others as appointed by

the Director for proper management and oversight of the project. The

board will be responsible for duties such as:

(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 with a pay increase greater than 10%;

(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; and

(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 additional incremental 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.

[[Page 10701]]

Figure 4.--Projected Developmental Costs

[Then Year Dollars]

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

FY96 FY97 FY98 FY99 FY00 FY01

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

Training......................... 10K 20K 30K .................. .................. .................

Project Evaluation............... 17K 32.5K 32.5K 32.5K 32.5K 32.5K

Automation....................... .................. 100K .................. .................. .................. .................

Data Systems..................... 69K .................. .................. .................. .................. .................

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

Totals........................... 96K 152.5K 62.5K 32.5K 32.5K 32.5K

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

IX. Required Waivers to Law and Regulation

A. Waivers to Title 5 United States Code

Chapter 31, section 3111: Amended to allow for a Voluntary Emeritus

Corps in addition to student volunteers.

Chapter 31, section 3132: The Senior Executive Service: Definitions

and Exclusions.

Chapter 33, section 3324: Appointments to Positions Classified

Above GS-15.

Chapter 33, section 3341: Details. This waiver applies to the

extent necessary to waive the time limits for 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 5101-5112, Classification.

Chapter 53, sections 5301; 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 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, sections 5361, 5363-5366: Pay Retention to the extent

necessary to (1) replace ``grade'' with ``band''; (2) allow

demonstration project employees to be treated as General Schedule

employees; (3) provide that pay retention provisions do not apply to

conversions from General Schedule special rates to demonstration

project pay, as long as total pay is not reduced, and (4) ensure that

for employees of Pay Band V of the E&S Occupational Family, pay

retention provisions are modified so that no rate established under

these provisions may exceed the rate of basic pay for GS-15, step 10

(i.e., there is no entitlement to retained rate).

Chapter 53, section 5362: Grade Retention.

Chapter 55, section 5542 (a)(1)-(2): Overtime rates; computation.

This waiver applies only to the extent necessary to provide that the

GS-10 minimum special rate (if any) for the special rate category to

which a project employee belongs is deemed to be the ``applicable

special rate'' in applying the pay cap provisions in 5 U.S.C. 5542.

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 55, section 5547 (a)-(b): Limitation on premium pay. This

waiver applies only to the extent necessary to provide that the GS-15

maximum special rate (if any) for the special rate category to which a

project employee belongs is deemed to be the ``applicable special

rate'' in applying the pay cap provisions in 5 U.S.C. 5547.

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 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, sections 308.101 through 308.103: Volunteer Service.

Amended to allow for a Voluntary Emeritus Corps in addition to student

volunteers.

Part 315, sections 315.801 and 315.802: Probationary period. (This

waiver applies only to the extent necessary to extend probationary

periods from one year to a maximum of three years for newly-hired

permanent career-conditional employees in the Engineer and Scientist

Occupational Family).

Part 315, section 315.901: Statutory requirements (this waiver

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

band.''

Part 316, section 316.301: (Term Appointments for more than 4

years)

Part 316, section 316.303: (Converting Terms to Status)

Part 316, section 316.305: Eligibility for within grade increases.

Part 335, section 335.103: 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, section 351.504: as it relates to years of credit and to

the extent that an employee's additional retention

[[Page 10702]]

service credit shall (a) be based on a presumed fully successful (level

3) when the employee has been demoted or reassigned because of

unacceptable performance or conduct, and as of the date of issuance of

reduction-in-force notices has not received a rating for performance in

the position to which demoted or reassigned; and (b) be the improved

rating when acceptable performance is demonstrated following an

opportunity to improve as provided in part 432 of this chapter; 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, and to

include employees with an unsatisfactory current performance rating of

record.

Part 410, section 410.308 (a), (b) (1-2), (b) (4-5), (c)-(g):

Training to obtain an academic degree.

Part 410, section 410.309: Agreements to Continue in Service--that

portion that pertains to the authority of the head of the agency to

determine continued service requirements, to waive repayment of such

requirements, and to the extent that the service obligation is to ARL.

Part 430, section 430.203: Rating of Record--to the extent that the

definition shall also include ratings for interns that are based on

less than the whole appraisal period and improved ratings following an

opportunity to demonstrate acceptable performance as provided for in

the waiver of 351.504.

Part 430, section 430.208 (b) (1) and (2): Rating Performance.

Part 432, section 432.102: to the extent that the term ``grade

level'' is replaced with ``pay band.''

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 the project plan,

although specifically excluded from Title 5, 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 the project plan 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 ST

employees for the purposes of these provisions.)

Part 536, Grade and Pay Retention: to the extent necessary to (1)

replace ``grade'' with ``pay band''; (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; and (3) ensure that for employees of Pay Band V of the E&S

Occupational Family, pay retention provisions are modified so that no

rate established under these provisions may exceed the rate of basic

pay for GS-15, step 10 (i.e., there is no entitlement to retained

rate).

Part 550, section 550.105-106: Biweekly and annual maximum earnings

limitations. This waiver applies only to the extent necessary to

provide that the GS-15 maximum special rate (if any) for the special

rate category to which a project employee belongs is deemed to be the

``applicable special rate'' in applying the pay cap provisions in 5

U.S.C. 5547.

Part 550, section 550.113(a): Computation of overtime pay.This

waiver applies only to the extent necessary to provide that the GS-10

minimum special rate (if any) for the special rate category to which a

project employee belongs is deemed to be the ``applicable special

rate'' in applying the pay cap provisions in 5 U.S.C. 5542.

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

This text is long and has been trimmed here. Open the source document for the complete record.